10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2005

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-5424

DELTA AIR LINES, INC.

State of Incorporation: Delaware
IRS Employer Identification No.: 58-0218548

P.O. Box 20706, Atlanta, Georgia 30320-6001

Telephone: (404) 715-2600

Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months, and (2) has been subject to such filing requirements for the past 90 days.
Yes þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act).
Yes þ No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act).
Yes o No þ

Number of shares outstanding by each class of common stock,
as of October 31, 2005:

Common Stock, $0.01 par value – 189,342,996 shares outstanding

This document is also available on our web site at http://investor.delta.com/edgar.cfm.

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS
OTHER INFORMATION
PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
	Item 4. Controls and Procedures
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 3. Defaults Upon Senior Securities
	Item 6. Exhibits
SIGNATURE
Exhibit Index
EX-10.1 SECURED SUPER-PRIORITY DEBTOR IN POSSESSION CREDIT AGRREMENT
EX-10.2 AMENDMENT NO. 1 TO SECURED SUPER-PRIORITY DEBTOR IN POSSESSION CREDIT AGREEMENT
EX-15 LETTER FROM DELOITTE & TOUCHE LLP
EX-31.1 SECTION 302 CERTIFICATION OF THE CEO
EX-31.2 SECTION 302 CERTIFICATION OF THE CFO
EX-32 SECTION 906 CERTIFICATION OF THE CEO AND CFO

FORWARD-LOOKING STATEMENTS

      Statements in this Form 10-Q (or otherwise made by us or on our behalf) that are not historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations. For examples of such risks and uncertainties, please see the cautionary statements contained in “Risk Factors Relating to Delta” and “Risk Factors Relating to the Airline Industry” in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this report.

OTHER INFORMATION

      On September 14, 2005, we and substantially all of our subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. No assurance can be given as to what values, if any, will be ascribed in our bankruptcy proceedings to our various pre-petition liabilities, common stock and other securities. A plan of reorganization could result in holders of our liabilities and securities receiving no value for their interests. Because of such possibilities, the value of these liabilities and securities is highly speculative. Accordingly, we urge that caution be exercised with respect to existing and future investments in any of these liabilities or securities. In addition, trading of our common stock on the New York Stock Exchange was suspended on October 13, 2005 and our common stock will be delisted from the New York Stock Exchange.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

DELTA AIR LINES, INC.
Debtor and Debtor-In-Possession
Consolidated Balance Sheets
(In Millions, Except Share Data)

	September 30,			December 31,
ASSETS	2005			2004
	(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents	$	1,361		$	1,463
Short-term investments		—			336
Restricted cash		1,119			348
Accounts receivable, net of an allowance for uncollectible accounts of $39 at September 30, 2005 and $38 at December 31, 2004		1,007			696
Expendable parts and supplies inventories, net of an allowance for obsolescence of $189 at September 30, 2005 and $184 at December 31, 2004		183			203
Prepaid expenses and other		613			560
Total current assets		4,283			3,606
PROPERTY AND EQUIPMENT:
Flight equipment		19,026			20,627
Accumulated depreciation		(6,846	)		(6,612	)
Flight equipment, net		12,180			14,015
Flight and ground equipment under capital leases		523			717
Accumulated amortization		(211	)		(364	)
Flight and ground equipment under capital leases, net		312			353
Ground property and equipment		4,852			4,805
Accumulated depreciation		(2,859	)		(2,706	)
Ground property and equipment, net		1,993			2,099
Advance payments for equipment		44			89
Total property and equipment, net		14,529			16,556
OTHER ASSETS:
Goodwill		227			227
Operating rights and other intangibles, net of accumulated amortization of $189 at September 30, 2005 and $185 at December 31, 2004		75			79
Restricted investments for Boston airport terminal project		53			127
Other noncurrent assets		1,048			1,206
Total other assets		1,403			1,639
Total assets	$	20,215		$	21,801

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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DELTA AIR LINES, INC.
Debtor and Debtor-In-Possession
Consolidated Balance Sheets
(In Millions, Except Share Data)

	September 30,			December 31,
LIABILITIES AND SHAREOWNERS’ DEFICIT	2005			2004
	(Unaudited)
CURRENT LIABILITIES:
Current maturities of long-term debt and capital leases	$	935		$	893
Accounts payable, deferred credits and other accrued liabilities		1,100			1,560
Air traffic liability		1,950			1,567
Taxes payable		540			499
Accrued salaries and related benefits		435			1,151
Accrued rent		—			271
Total current liabilities		4,960			5,941
NONCURRENT LIABILITIES:
Long-term debt and capital leases		6,657			12,507
Long-term debt issued by Massachusetts Port Authority		—			498
Postretirement benefits		—			1,771
Accrued rent		—			633
Pension and related benefits		—			5,099
Other		225			340
Total noncurrent liabilities		6,882			20,848
DEFERRED CREDITS:
Deferred gains on sale and leaseback transactions		—			376
Deferred revenue and other credits		201			155
Total deferred credits		201			531
LIABILITIES SUBJECT TO COMPROMISE (Note 2)		16,385			—
COMMITMENTS AND CONTINGENCIES (Notes 2, 3 and 5)
EMPLOYEE STOCK OWNERSHIP PLAN PREFERRED STOCK:
Series B ESOP Convertible Preferred Stock:
$1.00 par value, $72.00 stated and liquidation value, 4,668,107 shares issued and outstanding at September 30, 2005; and 5,417,735 shares issued and outstanding at December 31, 2004		336			390
Unearned compensation under employee stock ownership plan		(86	)		(113	)
Total Employee Stock Ownership Plan Preferred Stock		250			277
SHAREOWNERS’ DEFICIT:
Common stock:
$0.01 par value, 900,000,000 shares authorized, 202,081,648 shares issued at September 30, 2005; and $1.50 par value, 450,000,000 shares authorized, 190,745,445 shares issued at December 31, 2004		2			286
Additional paid-in capital		1,636			3,052
Accumulated deficit		(6,971	)		(4,373	)
Accumulated other comprehensive loss		(2,529	)		(2,358	)
Treasury stock at cost, 12,738,652 shares at September 30, 2005 and 50,915,002 shares at December 31, 2004		(601	)		(2,403	)
Total shareowners’ deficit		(8,463	)		(5,796	)
Total liabilities and shareowners’ deficit	$	20,215		$	21,801

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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DELTA AIR LINES, INC.
Debtor and Debtor-In-Possession
Consolidated Statements of Operations
(Unaudited)
(In Millions, Except Share and Per Share Data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
OPERATING REVENUES:
Passenger:
Mainline	$	3,041		$	2,814		$	8,735		$	8,269
Regional affiliates		850			750			2,370			2,192
Cargo		128			117			387			364
Other, net		197			190			556			536
Total operating revenues		4,216			3,871			12,048			11,361
OPERATING EXPENSES:
Salaries and related costs		1,235			1,616			3,944			4,809
Aircraft fuel		1,203			786			3,141			2,029
Depreciation and amortization		317			311			956			929
Contracted services		275			249			817			739
Contract carrier arrangements		313			234			728			708
Landing fees and other rents		216			220			658			657
Aircraft maintenance materials and outside repairs		215			197			598			518
Aircraft rent		141			181			435			544
Passenger commissions and other selling expenses		152			185			530			561
Passenger service		90			97			269			260
Pension settlements, asset writedowns, restructuring and related items, net		85			54			712			171
Other		214			164			586			488
Total operating expenses		4,456			4,294			13,374			12,413
OPERATING LOSS		(240	)		(423	)		(1,326	)		(1,052	)
OTHER INCOME (EXPENSE):
Interest expense (contractual interest expense equals $298 and $859 for the three and nine months ended September 30, 2005, respectively)		(277	)		(210	)		(833	)		(601	)
Interest income		17			6			45			27
Miscellaneous, net		—			(25	)		(1	)		(53	)
Total other expense, net		(260	)		(229	)		(789	)		(627	)
LOSS BEFORE REORGANIZATION ITEMS, NET		(500	)		(652	)		(2,115	)		(1,679	)
REORGANIZATION ITEMS, NET (Note 2)		(607	)		—			(607	)		—
LOSS BEFORE INCOME TAXES		(1,107	)		(652	)		(2,722	)		(1,679	)
INCOME TAX (PROVISION) BENEFIT		(23	)		6			139			(1,313	)
NET LOSS		(1,130	)		(646	)		(2,583	)		(2,992	)
PREFERRED STOCK DIVIDENDS		(4	)		(5	)		(15	)		(14	)
NET LOSS ATTRIBUTABLE TO COMMON SHAREOWNERS	$	(1,134	)	$	(651	)	$	(2,598	)	$	(3,006	)
BASIC AND DILUTED LOSS PER SHARE	$	(6.73	)	$	(5.16	)	$	(17.07	)	$	(24.06	)
WEIGHTED AVERAGE SHARES USED IN BASIC AND DILUTED PER SHARE COMPUTATION		168,433,862			126,150,521			152,160,183			124,911,323

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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DELTA AIR LINES, INC.
Debtor and Debtor-In-Possession
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In Millions)

	Nine Months Ended
	September 30,
	2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,583	)	$	(2,992	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities, net		2,170			2,231
Changes in certain assets and liabilities, net		576			248
Net cash provided by (used in) operating activities		163			(513	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions:
Flight equipment, including advance payments		(535	)		(383	)
Ground property and equipment		(196	)		(292	)
Proceeds from sale of flight equipment		425			4
Proceeds from sale of wholly owned subsidiary, net of cash remaining with subsidiary		297			—
Decrease in restricted investments related to Boston airport terminal project		73			131
Increase in restricted cash		(891	)		(87	)
Other, net		8			4
Net cash used in investing activities		(819	)		(623	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt and capital lease obligations		(1,443	)		(1,298	)
Proceeds from borrowing from long-term obligations		2,045			1,271
Other, net		(48	)		(17	)
Net cash provided by (used) in financing activities		554			(44	)
Net decrease in cash and cash equivalents		(102	)		(1,180	)
Cash and cash equivalents at beginning of period		1,463			2,170
Cash and cash equivalents at end of period	$	1,361		$	990
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amounts capitalized)	$	596		$	525
Income taxes, net	$	3		$	1
NON-CASH TRANSACTIONS:
Aircraft delivered under seller-financing	$	251		$	202
Dividends on Series B ESOP Convertible Preferred Stock	$	10		$	17
Current maturities of long-term debt exchanged for shares of common stock	$	45		$	—

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

5

DELTA AIR LINES, INC.
Debtor and Debtor-In-Possession
Statistical Summary ⁽¹⁾
(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Consolidated:
Revenue Passenger Miles (millions) (2)		32,513			30,418			92,353			85,201
Available Seat Miles (millions) (2)		41,045			39,167			119,397			113,536
Passenger Mile Yield (2)		11.97	¢		11.72	¢		12.03	¢		12.28	¢
Operating Revenue Per Available Seat Mile (2)		10.27	¢		9.88	¢		10.09	¢		10.01	¢
Passenger Revenue Per Available Seat Mile (2)		9.48	¢		9.10	¢		9.30	¢		9.21	¢
Operating Cost Per Available Seat Mile (2)		10.86	¢		10.96	¢		11.20	¢		10.93	¢
Passenger Load Factor (2)		79.21	%		77.66	%		77.35	%		75.04	%
Breakeven Passenger Load Factor (2)		84.10	%		86.88	%		86.59	%		82.59	%
Passengers Enplaned (thousands) (2)		30,870			28,247			91,682			82,206
Fuel Gallons Consumed (millions)		660			654			1,941			1,896
Average Price Per Fuel Gallon, Net of Hedging Gains	$	1.82		$	1.20		$	1.62		$	1.07
Number of Aircraft in Fleet, End of Period		682			842			682			842
Full-Time Equivalent Employees, End of Period		58,000			69,700			58,000			69,700
Mainline:
Revenue Passenger Miles (millions)		28,292			26,438			80,274			73,966
Available Seat Miles (millions)		35,148			33,576			102,307			97,260
Operating Cost Per Available Seat Mile		9.99	¢		10.37	¢		10.48	¢		10.36	¢
Number of Aircraft in Fleet, End of Period		508			542			508			542

(1)	Not subject to the review procedures of our Independent Registered Public Accounting Firm.
(2)	Includes the operations under our contract carrier agreements with:

- Chautauqua Airlines, Inc. and SkyWest Airlines, Inc. for all periods presented.

- Flyi, Inc. (formerly Atlantic Coast Airlines) for the three and nine months ended September 30, 2004.

- Shuttle America Corporation from September 1, 2005, to September 30, 2005.

- Atlantic Southeast Airlines, Inc. (“ASA”) from September 8, 2005, to September 30, 2005. On September 7, 2005, we completed the sale of ASA to SkyWest, Inc. (“SkyWest”). For additional information on our sale of ASA, see Note 4 in this Form 10-Q.

For additional information about our contract carrier agreements, see Note 5 in this Form 10-Q.

6

DELTA AIR LINES, INC.
Debtor and Debtor-In-Possession
Aircraft Fleet Table⁽¹⁾
(Unaudited)

Our active aircraft fleet, orders, options and rolling options at September 30, 2005, are summarized in the following table. Options have scheduled delivery slots. Rolling options replace options and are assigned delivery slots as options expire or are exercised.

	Current Fleet (2)(3)(4)
Aircraft Type	Owned		Capital Lease		Operating Lease		Total		Average Age		Orders		Options		Rolling Options
B-737-200		6		7		19		32		20.7		—		—		—
B-737-300		—		—		21		21		18.6		—		—		—
B-737-800		71		—		—		71		4.9		50		60		168
B-757-200		77		10		34		121		14.1		—		—		—
B-767-200		11		—		—		11		22.2		—		—		—
B-767-300		4		10		14		28		15.7		—		—		—
B-767-300ER		50		—		9		59		9.6		—		10		4
B-767-400ER		21		—		—		21		4.6		—		20		—
B-777-200ER		8		—		—		8		5.7		5		20		5
MD-88		63		16		41		120		15.3		—		—		—
MD-90		16		—		—		16		9.8		—		—		—
CRJ-100/200		57		—		90		147		7.2		—		55		—
CRJ-700		27		—		—		27		2.1		—		49		—
Total		411		43		228		682				55		214		177

⁽¹⁾ Not subject to the review procedures of our Independent Registered Public Accounting Firm.

⁽²⁾ On September 7, 2005, we completed the sale of ASA to SkyWest. Accordingly, this table does not include ASA’s fleet of eight ATR-72 aircraft, 103 CRJ-200 aircraft and 35 CRJ-700 aircraft, its firm orders for 18 CRJ-200 aircraft or its options for 53 CRJ-200 aircraft and 57 CRJ-700 aircraft. For additional information regarding our sale of ASA, see Note 4 in this Form 10-Q.

⁽³⁾ During the September 2005 quarter, we filed motions to reject leases of 30 FRJ-328 aircraft, four B-737-200 aircraft and six MD-11 aircraft with the Bankruptcy Court in our Chapter 11 proceedings. On October 17, 2005, the Bankruptcy Court granted these motions.

⁽⁴⁾ During the September 2005 quarter, we (1) retired eight leased B-737-200 aircraft and three owned B-767-200 aircraft; (2) accepted delivery from the manufacturer of one B-737-800 aircraft, which we immediately sold to a third party pursuant to an agreement entered into in 2003 (see “Sale of Aircraft” in Note 5 in this Form 10-Q); and (3) accepted delivery of seven CRJ-200 aircraft from General Electric Capital Corporation (“GECC”) (see “GECC Aircraft” in Note 5 in this Form 10-Q).

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DELTA AIR LINES, INC.
Debtor and Debtor-In-Possession
Notes to the Condensed Consolidated Financial Statements
September 30, 2005
(Unaudited)

1. ACCOUNTING AND REPORTING POLICIES

Basis of Presentation

     On September 14, 2005 (the “Petition Date”), we and substantially all of our subsidiaries (collectively, the “Debtors”) filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”), in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). The reorganization cases are being jointly administered under the caption “In re Delta Air Lines, Inc., et al., Case No. 05-17923-PCB.”

     On September 16, 2005, the Bankruptcy Court granted interim approval of first day motions to facilitate our continuation of normal operations. The Bankruptcy Court’s orders authorized us, among other things, in our discretion to: (1) provide employee wages, healthcare coverage, vacation, sick leave and similar benefits without interruption; (2) honor obligations arising prior to the Petition Date (“pre-petition obligations”) to customers and continue customer service programs, including Delta’s SkyMiles frequent flyer program; (3) pay for fuel under existing fuel supply contracts and honor existing fuel supply, distribution and storage agreements; (4) honor pre-petition obligations related to our interline, clearinghouse, code sharing and other similar agreements; (5) pay pre-petition obligations to foreign vendors, foreign service providers and foreign governments; and (6) continue maintenance of existing bank accounts and existing cash management systems.

     The Debtors will operate as “debtors-in-possession” under the jurisdiction and orders of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code. In general, as debtors-in-possession, the Debtors are authorized under Chapter 11 to continue to operate as an ongoing business, but may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court.

     As a part of our Chapter 11 reorganization, we are now expanding our transformation plan to pursue an additional $3 billion in annual financial benefits (revenue enhancements or cost reductions) by the end of 2007 above the approximately $5 billion in annual benefits we are on track to deliver by the end of 2006 (as compared to 2002). Our expanded transformation plan is intended to make Delta a smaller, more cost-efficient airline with a strengthened network and improved financial condition. The expanded transformation plan combines planned revenue and network productivity improvements with savings to be achieved through the Chapter 11 restructuring process and more competitive employment costs.

     The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, this Form 10-Q does not include all the information required by GAAP for complete financial statements. As a result, this Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying Notes in our Annual Report on Form 10-K for the fiscal year ended December 31, 2004 (“Form 10-K”).

     In accordance with GAAP, we have applied the provisions of American Institute of Certified Public Accountants’ (“AICPA”) Statement of Position 90-7, “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code” (“SOP 90-7”), in preparing the Condensed Consolidated Financial Statements. SOP 90-7 requires that the financial statements, for periods subsequent to the Chapter 11 filing, distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain items of income, expense, gain or loss realized or incurred because we are in Chapter 11 are recorded in reorganization items, net on the accompanying Consolidated Statements of Operations. Also, pre-petition obligations that may be impacted by the bankruptcy reorganization process have been classified on the Consolidated Balance Sheet at September 30, 2005 in liabilities subject to compromise. These liabilities are reported at the amounts expected to be allowed by the Bankruptcy Court, even if they may be settled for lesser amounts (See Note 2 in this Form 10-Q).

     We have also prepared these unaudited Condensed Consolidated Financial Statements on a going concern basis, which contemplates continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business. Accordingly, our Condensed Consolidated Financial Statements do not include any

8

adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should we be unable to continue as a going concern.

     As a result of sustained losses and our Chapter 11 proceedings, the realization of assets and satisfaction of liabilities, without substantial adjustments and/or changes in ownership, are subject to uncertainty. Given this uncertainty, there is substantial doubt about our ability to continue as a going concern.

     While operating as debtors-in-possession under Chapter 11 of the Bankruptcy Code, the Debtors may sell or otherwise dispose of or liquidate assets or settle liabilities, subject to the approval of the Bankruptcy Court or otherwise as permitted in the ordinary course of business, in amounts other than those reflected in the Condensed Consolidated Financial Statements. Further, a plan of reorganization could materially change the amounts and classifications in the historical Condensed Consolidated Financial Statements.

     Management believes that the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, consisting of normal recurring items, restructuring and related items, and reorganization items, considered necessary for a fair statement of results for the interim periods presented.

     We classified changes in restricted cash on our Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2005, as an investing activity. We previously presented such changes as an operating activity. In the accompanying Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2004, we reclassified changes in restricted cash to be consistent with our 2005 presentation. This resulted in an $87 million increase to cash flows used in investing activities and a corresponding decrease to cash flows used in operating activities from the amounts previously reported.

     We have reclassified certain other prior period amounts in the Condensed Consolidated Financial Statements to be consistent with current period presentation. The effect of these reclassifications is not material.

     Due to the impact of the Chapter 11 proceedings, seasonal variations in the demand for air travel, the volatility of aircraft fuel prices and other factors, operating results for the three and nine months ended September 30, 2005, are not necessarily indicative of operating results for the entire year.

Cash and Cash Equivalents

     We classify short-term, highly liquid investments with maturities of three months or less when purchased as cash and cash equivalents. These investments are recorded at cost, which approximates fair value. Cash and cash equivalents as of September 30, 2005 includes approximately $128 million to be used for payment of certain operational taxes and fees to various governmental authorities.

     Under our cash management system, we utilize controlled disbursement accounts that are funded daily. Checks we issue which have not been presented for payment are recorded in accounts payable, deferred credits and accrued liabilities on our Consolidated Balance Sheets. These amounts totaled $45 million and $63 million at September 30, 2005 and December 31, 2004, respectively.

Restricted Cash

     We have restricted cash which primarily relates to cash held as collateral by credit card processors and interline clearinghouses as well as for certain projected insurance obligations. Restricted cash included in current assets on our Consolidated Balance Sheets totaled $1.1 billion and $348 million at September 30, 2005 and December 31, 2004, respectively. Restricted cash recorded in other noncurrent assets on our Consolidated Balance Sheets totaled $122 million and $2 million at September 30, 2005 and December 31, 2004, respectively.

Stock-Based Compensation

     We account for our stock-based compensation plans under the intrinsic value method in accordance with Accounting Principles Board (“APB”) Opinion 25, “Accounting for Stock Issued to Employees” (“APB 25”), and related interpretations. For additional information related to our stock-based compensation plans, see Note 11 of the Notes to the Consolidated Financial Statements in our Form 10-K. No stock option compensation expense is recognized in our Consolidated Statements of Operations because all stock options granted had an exercise price equal to the fair value of the underlying common stock on the grant date.

     The estimated fair values of stock options granted during the three and nine months ended September 30, 2005 and 2004, were derived using the Black-Scholes model. The following table includes the assumptions used in estimating fair values and the resulting weighted average fair value of stock options granted in the periods presented:

9

	Stock Options Granted During the
	Three Months Ended					Nine Months Ended
	September 30,					September 30,
Assumption	2005			2004(1)		2005			2004
Risk-free interest rate		4.1	%		—		3.8	%		2.6	%
Average expected life of stock options (in years)		3.0			—		3.0			4.0
Expected volatility of common stock		72.2	%		—		73.6	%		58.3	%
Expected annual dividends on common stock	$	—		$	—	$	—		$	—
Weighted average fair value of a stock option granted	$	2		$	—	$	2		$	5

⁽¹⁾ There were no stock options granted during the three months ended September 30, 2004.

     The following table shows what our net loss and loss per share would have been for the three and nine months ended September 30, 2005 and 2004, had we accounted for our stock-based compensation plans under the fair value method in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), as amended:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in millions, except per share data)	2005			2004			2005			2004
Net loss:
As reported	$	(1,130	)	$	(646	)	$	(2,583	)	$	(2,992	)
Stock option compensation expense determined under the fair value based method		(25	)		(4	)		(82	)		(12	)
As adjusted for the fair value method under SFAS 123	$	(1,155	)	$	(650	)	$	(2,665	)	$	(3,004	)
Basic and diluted loss per share:
As reported	$	(6.73	)	$	(5.16	)	$	(17.07	)	$	(24.06	)
As adjusted for the fair value method under SFAS 123	$	(6.88	)	$	(5.19	)	$	(17.61	)	$	(24.16	)

     In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”). This standard replaces SFAS 123 and supersedes APB 25. It requires the compensation cost of share-based payment transactions to be recognized in financial statements based on the fair value of the equity or liability instruments issued. We will adopt SFAS 123R effective January 1, 2006. We are evaluating the impact of SFAS 123R, including the transition options for adoption of this standard, on our 2006 Consolidated Financial Statements. This impact may be material because we issued approximately 71 million stock options in 2004, primarily under our broad-based employee stock option plans. As of November 1, 2005, we terminated the Non-Employee Directors Stock Option Plan. For additional information about our stock option plans see Note 11 of the Notes to the Consolidated Financial Statements in our Form 10-K.

2. CHAPTER 11 PROCEEDINGS

General Information

     Notices to Creditors; Effect of Automatic Stay. Shortly after the Chapter 11 filing on September 14, 2005, the Debtors began notifying all known current or potential creditors of the Chapter 11 filing.

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     Subject to certain exceptions under the Bankruptcy Code, the Debtors’ Chapter 11 filing automatically enjoined, or stayed, the continuation of any judicial or administrative proceedings or other actions against the Debtors or their property to recover on, collect or secure a claim arising prior to the Petition Date. Thus, for example, most creditor actions to obtain possession of property from the Debtors, or to create, perfect or enforce any lien against the property of the Debtors, or to collect on monies owed or otherwise exercise rights or remedies with respect to a pre-petition claim are enjoined unless and until the Bankruptcy Court lifts the automatic stay.

     Appointment of Creditors’ Committee. As required by the Bankruptcy Code, the United States Trustee for the Southern District of New York has appointed an official committee of unsecured creditors (the “Creditors’ Committee”). The Creditors’ Committee and its legal representatives have a right to be heard on all matters that come before the Bankruptcy Court with respect to the Debtors. There can be no assurance that the Creditors’ Committee will support the Debtors’ positions or ultimate plan of reorganization, once proposed. Disagreements between the Debtors and the Creditors’ Committee could protract the Chapter 11 proceedings, negatively impact the Debtors’ ability to operate and delay the Debtors’ emergence from the Chapter 11 proceedings.

     Rejection of Executory Contracts. Under Section 365 and other relevant sections of the Bankruptcy Code, the Debtors may assume, assume and assign, or reject certain executory contracts and unexpired leases, including, without limitation, leases of real property, aircraft and aircraft engines, subject to the approval of the Bankruptcy Court and certain other conditions. In general, rejection of an executory contract or unexpired lease is treated as a pre-petition breach of the executory contract or unexpired lease in question and, subject to certain exceptions, relieves the Debtors of performing their future obligations under such executory contract or unexpired lease but entitles the contract counterparty or lessor to a pre-petition general unsecured claim for damages caused by such deemed breach. Counterparties to such rejected contracts or leases can file claims against the Debtors’ estate for such damages. Generally, the assumption of an executory contract or unexpired lease requires the Debtors to cure most existing defaults under such executory contract or unexpired lease.

     Accordingly, any description of an executory contract or unexpired lease elsewhere in these Notes, including where applicable our express termination rights or a quantification of our obligations, must be read in conjunction with, and is qualified by, any overriding rejection rights we have under Section 365 of the Bankruptcy Code.

     We expect that liabilities subject to compromise and resolution in the Chapter 11 proceedings will arise in the future as a result of damage claims created by the Debtors’ rejection of various executory contracts and unexpired leases. Conversely, we expect that the assumption of certain executory contracts and unexpired leases may convert liabilities shown as subject to compromise to liabilities not subject to compromise. Due to the uncertain nature of many of the potential rejection claims, the magnitude of such claims is not reasonably estimable at this time. Such claims may be material.

     Special Protection Applicable to Leases and Secured Financing of Aircraft and Aircraft Equipment. Notwithstanding the general discussion above of the impact of the automatic stay, under Section 1110 of the Bankruptcy Code (“Section 1110”), certain secured parties, lessors and conditional sales vendors may take possession of certain qualifying aircraft, aircraft engines and other aircraft-related equipment that are leased or subject to a security interest or conditional sale contract pursuant to their agreement with the Debtors. Section 1110 provides that, unless the Debtors agree to perform under the agreement and cure all defaults within 60 days after the Petition Date, such financing party can take possession of such equipment.

     Section 1110 effectively shortens the automatic stay period to 60 days with respect to Section 1110-eligible aircraft, engines and related equipment subject to the following two conditions. First, the debtor may extend the 60-day period by agreement of the relevant financier, with court approval. Alternatively, the debtor may agree, with court approval, to perform all of the obligations under the applicable financing and cure any defaults thereunder as required by the Bankruptcy Code (which does not preclude later rejecting any related lease). In the absence of either such

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arrangement, the financier may take possession of the property and enforce any of its contractual rights or remedies to sell, lease or otherwise retain or dispose of such equipment. While we are negotiating with respect to many of our aircraft obligations, the ultimate outcome of these negotiations cannot be predicted with certainty. To the extent we are unable to reach agreements with aircraft financiers, those parties may seek to repossess aircraft.

     Request for Adequate Protection. Certain aircraft lenders and leasing parties have filed motions with the Bankruptcy Court seeking adequate protection against the risk that their aircraft collateral could lose value while in the possession of or while being used by the Debtors. The Bankruptcy Court could determine that some or all of such parties are not adequately protected and that the Debtors must pay certain amounts, which could be material, in order to continue using the equipment.

     Rejection of Collective Bargaining Agreements. Section 1113 of the Bankruptcy Code permits a debtor to reject its collective bargaining agreements (“CBAs”) if the debtor first satisfies several statutorily prescribed substantive and procedural prerequisites and obtains the Bankruptcy Court’s approval of the rejection. The debtor must make a proposal to modify its existing CBAs based on the most complete and reliable information available at the time, must bargain in good faith and must share relevant information with its unions. The proposed modifications must be necessary to permit the reorganization of the debtor and must ensure that all affected parties are treated fairly and equitably relative to the creditors and the debtor. Rejection is appropriate if the unions refuse to agree to the debtors’ necessary proposals “without good cause” and the balance of the equities favors rejection.

     On September 16, 2005, we submitted a proposal to modify the CBA covering our pilots, who are represented by the Air Line Pilots Association, International (“ALPA”). Following unsuccessful efforts to reach a voluntary agreement with ALPA to amend the CBA, on November 1, 2005, we filed a motion with the Bankruptcy Court to reject the CBA. The Bankruptcy Court has scheduled a hearing on our motion for November 16, 2005. Pursuant to Section 1113(c), the Bankruptcy Court is required to rule on our motion within 30 days after the commencement of the hearing, subject to extension if we and ALPA agree. If the Bankruptcy Court grants our motion, we may implement the terms in our proposal.

     Payment of Insurance Benefits to Retired Employees. Section 1114 of the Bankruptcy Code addresses a debtor’s ability to modify certain retiree disability, medical and death benefits (“Covered Benefits”). To modify Covered Benefits, the debtor must satisfy certain statutorily prescribed procedural and substantive prerequisites and obtain either (1) the Bankruptcy Court’s approval or (2) the consent of an authorized representative of retirees. The debtor must make a proposal to modify the Covered Benefits based on the most complete and reliable information available at the time, must bargain in good faith and must share relevant information with the retiree representative. The proposed modifications must be necessary to permit the reorganization of the debtor and must ensure that all affected parties are treated fairly and equitably relative to the creditors and the debtor.

     On October 27, 2005, the Bankruptcy Court directed the appointment of an 1114 committee to serve as the authorized representative of non-pilot retirees, without prejudice to our right to move to add retired pilots to the committee or the right of retired pilots to make a request for a retired pilot committee. We have not yet made any proposal to modify retiree benefits that we believe are Covered Benefits.

     Magnitude of Potential Claims. The Debtors will file with the Bankruptcy Court schedules and statements of financial affairs setting forth, among other things, the assets and liabilities of the Debtors, subject to the assumptions contained in certain notes filed in connection therewith. All of the schedules will be subject to further amendment or modification. Differences between amounts scheduled by the Debtors and claims by creditors will be investigated and resolved in connection with the claims resolution process. In light of the expected number of creditors, the claims resolution process may take considerable time to complete. Accordingly, the ultimate number and amount of allowed claims is not presently known, nor can the ultimate recovery with respect to allowed claims be presently ascertained.

     Costs of Reorganization. We have incurred and will continue to incur significant costs associated with the reorganization. The amount of these costs, which are being expensed as incurred, are expected to significantly affect our results of operations.

     Effect of Filing on Creditors and Shareowners. Under the priority scheme established by the Bankruptcy Code, unless creditors agree otherwise, pre-petition liabilities and post-petition liabilities must be satisfied in full before shareowners are entitled to receive any distribution or retain any property under a plan of reorganization. The ultimate recovery to creditors and/or shareowners, if any, will not be determined until confirmation of a plan or plans of reorganization. No assurance can be given as to what values, if any, will be ascribed in the Chapter 11 cases to each of these constituencies or what types or amounts of distributions, if any, they would receive. A plan of reorganization could result in holders of our liabilities and/or securities, including our preferred and common stock receiving no distribution on account of their interests and cancellation of their holdings. As discussed below, if the requirements of Section 1129(b) of the Bankruptcy Code are met, a plan of reorganization can be confirmed notwithstanding its rejection by the holders of our stock and notwithstanding the fact that such holders do not receive or retain any property on account of their equity interests under the plan. Because of such possibilities, the value of our liabilities and securities, including our stock is highly speculative. We urge that appropriate caution be exercised with respect to existing and future investments in any of the liabilities and/or securities of the Debtors.

     Notice and Hearing Procedures for Trading in Claims and Equity Securities. In connection with our Chapter 11 proceedings, the Bankruptcy Court granted a motion and entered an interim order

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(the “NOL Order”), to assist us in monitoring and preserving our net operating losses by imposing certain notice and hearing procedures on trading in (1) our equity securities and (2) claims against us. Under the NOL Order, any person or entity that is a Substantial Equityholder or Substantial Claimholder (each as defined below) must provide advance notice to the Bankruptcy Court, to us and our counsel prior to purchasing or selling any of our equity securities or claims against us, and we will have 15 calendar days after receipt of such notice to object to any proposed transfer. If we file an objection, such transaction would not be effective unless approved by a final and nonappealable order of the Bankruptcy Court. If we do not object within such 15 day period, such transaction may proceed solely as set forth in the notice. Moreover, the NOL Order requires that a Substantial Equityholder or Substantial Claimholder file and serve a notice setting forth the size of their holdings on or before the later of (1) 15 days after the effective date of the notice of entry of the NOL Order or (2) 10 days after becoming such a beneficial owner.

     In general, the NOL Order applies to any person or entity that, directly or indirectly, beneficially owns (or would beneficially own as the result of a proposed transfer) (1) 7,464,750 million or more shares of our common stock (such entity, a “Substantial Equityholder ”) or (2) an aggregate principal amount of claims against us equal to or exceeding $175 million (such entity, a “Substantial Claimholder”).

     Pursuant to the NOL Order, any purchase, sale or other transfer of equity securities or claims in violation of these procedures will be null and void in violation of the automatic stay under Section 362 of the Bankruptcy Code.

     Various parties have filed objections to the NOL Order and we are currently negotiating settlements to their objections. A final order with respect to the matters addressed in the NOL Order may ultimately be significantly different from the NOL Order.

     Process for Plan of Reorganization. In order to successfully exit Chapter 11, the Debtors will need to propose, and obtain confirmation by the Bankruptcy Court of, a plan of reorganization that satisfies the requirements of the Bankruptcy Code. A plan of reorganization would resolve, among other things, the Debtors’ pre-petition obligations, set forth the revised capital structure of the newly reorganized entity and provide for corporate governance subsequent to exit from bankruptcy.

     The Debtors have the exclusive right for 120 days after the Petition Date to file a plan of reorganization and, if we do so, 60 additional days to obtain necessary acceptances of our plan. Such periods may be extended by the Bankruptcy Court for cause. If the Debtors’ exclusivity period lapses, any party in interest may file a plan of reorganization for any of the Debtors. In addition to being voted on by holders of impaired claims and equity interests, a plan of reorganization must satisfy certain requirements of the Bankruptcy Code and must be approved, or confirmed, by the Bankruptcy Court in order to become effective. A plan has been accepted by holders of claims against and equity interests in the Debtors if (1) at least one-half in number and two-thirds in dollar amount of claims actually voting in each impaired class of claims have voted to accept the plan and (2) at least two-thirds in amount of equity interests actually voting in each impaired class of equity interests has voted to accept the plan. Under certain circumstances set forth in the provisions of Section 1129(b) of the Bankruptcy Code, the Bankruptcy Court may confirm a plan even if such plan has not been accepted by all impaired classes of claims and equity interests. A class of claims or equity interests that does not receive or retain any property under the plan on account of such claims or interests is deemed to have voted to reject the plan. The precise requirements and evidentiary showing for confirming a plan notwithstanding its rejection by one or more impaired classes of claims or equity interests depends upon a number of factors, including the status and seniority of the claims or equity interests in the rejecting class (i.e., secured claims or unsecured claims, subordinated or senior claims, preferred or common stock). Generally, with respect to common stock interests, a plan may be “crammed down” even if the stockholders receive no recovery if the proponent of the plan demonstrates that (1) no class junior to the common stock is receiving or retaining property under the plan and (2) no class of claims or interests senior to the common stock is being paid more than in full.

     The timing of filing a plan of reorganization by us will depend on the timing and outcome of numerous other ongoing matters in the Chapter 11 proceedings. Although we expect to file a plan of reorganization

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that provides for our emergence from bankruptcy as a going concern, there can be no assurance at this time that a plan of reorganization will be confirmed by the Bankruptcy Court, or that any such plan will be implemented successfully.

Liabilities Subject to Compromise

     The following table summarizes the components of liabilities subject to compromise included on our Consolidated Balance Sheet as of September 30, 2005:

(in millions)	September 30, 2005
Pension, postretirement and other benefits	$	8,139
Debt and accrued interest		5,690
Aircraft lease related obligations		1,479
Accounts payable and other accrued liabilities		1,077
Total liabilities subject to compromise	$	16,385

     Liabilities subject to compromise refers to pre-petition obligations which may be impacted by the Chapter 11 reorganization process. These amounts represent our current estimate of known or potential pre-petition obligations to be resolved in connection with our Chapter 11 proceedings.

     Differences between liabilities we have estimated and the claims filed, or to be filed, will be investigated and resolved in connection with the claims resolution process. We will continue to evaluate these liabilities throughout the Chapter 11 process and adjust amounts as necessary. Such adjustments may be material. In light of the expected number of creditors, the claims resolution process may take considerable time to complete. Accordingly, the ultimate number and amount of allowed claims is not presently known.

Reorganization Items, net

     The following table summarizes the components included in reorganization items, net on our Consolidated Statements of Operations for the three and nine months ended September 30, 2005:

	Three and Nine
	Months Ended
(in millions)	September 30, 2005
Rejection of aircraft leases	$	444
Debt issuance and discount costs		160
Professional fees		4
Interest Income		(1	)
Total reorganization items, net	$	607

     In the quarter ended September 30, 2005, we filed motions with the Bankruptcy Court to reject six MD-11, 30 FRJ-328 and four B-737-200 aircraft leases. These aircraft were not in service at the time we filed these motions. On October 17, 2005, the Bankruptcy Court granted these motions. Our lease rejections result in a pre-petition unsecured claim of the lessor. These estimated claims are reflected in liabilities subject to compromise on our Consolidated Balance Sheet as of September 30, 2005. We also wrote off debt issuance and discount costs related to unsecured and under-secured debt obligations which have been classified as liabilities subject to compromise. No amounts were received or paid with respect to our reorganization items during the three and nine month periods ended September 30, 2005.

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3. DEBT

Debtor-in-Possession Financing

     On September 16, 2005, we entered into a Secured Super-Priority Debtor-in-Possession Credit Agreement (the “DIP Credit Facility”) to borrow up to $1.7 billion from a syndicate of lenders arranged by General Electric Capital Corporation (“GECC”) and Morgan Stanley Senior Funding, Inc. (“Morgan Stanley”), for which GECC would act as administrative agent. On October 7, 2005, we entered into an amendment to the DIP Credit Facility (the “Amendment”) to increase the DIP Credit Facility by an additional $200 million, with American Express Travel Related Services Company, Inc. (“Amex”) consenting to such increase in the DIP Credit Facility in return for repayment of $50 million of the $350 million principal amount outstanding under the Amex Post-Petition Facility (defined below).

     As amended, the DIP Credit Facility consists of a $600 million Term Loan A arranged by GECC (the “TLA”), a $700 million Term Loan B arranged by GECC (the “TLB”) and a $600 million Term Loan C arranged jointly by GECC and Morgan Stanley (the “TLC;” together with the TLA and TLB, collectively, the “DIP Loans”). Interim orders issued by the Bankruptcy Court authorized us on an interim basis to borrow up to $1.4 billion of the DIP Loans. Final orders issued by the Bankruptcy Court authorized us to borrow the remaining approximately $500 million under the DIP Credit Facility as amended. We applied a portion of these proceeds to (1) repay in full the $480 million principal amount outstanding under our pre-petition facility for which GECC was agent (the “GE Pre-Petition Facility”); (2) repay in full the $500 million principal amount outstanding under our Amex Pre-Petition Facilities (defined below); and (3) prepay $50 million of the $350 million principal amount outstanding under our Amex Post-Petition Facility. The remainder of the proceeds of the DIP Loans will be used for our general corporate purposes.

     Availability of funds under the TLA is subject to a borrowing base calculation. If the outstanding amount of the TLA at any time exceeds the borrowing base, we must immediately repay the TLA or post cash collateral in an amount equal to the excess. The TLA, TLB and TLC each mature on March 16, 2008. As amended, the TLA bears interest, at our option, at LIBOR plus 4.50% or an index rate plus 3.75%, and the TLB bears interest, at our option, at LIBOR plus 6.50% or an index rate plus 5.75%. The TLC bears interest, at our option, at LIBOR plus 9.00% or an index rate plus 8.25%. We may also request the issuance of up to $200 million in letters of credit under the DIP Credit Facility, which amount must be fully cash collateralized at all times such letters of credit are outstanding.

     Our obligations under the DIP Credit Facility are guaranteed by substantially all of our domestic subsidiaries (the “Guarantors”). We will be required to make certain mandatory repayments of the DIP Loans in the event we sell certain assets, subject to certain exceptions. Any portion of the DIP Loans that are repaid through either voluntary or mandatory prepayment may not be reborrowed.

     The DIP Loans and the related guarantees are secured by first priority liens on substantially all of our and the Guarantors’ present and future assets (including assets that previously secured the GE Pre-Petition Facility) and by junior liens on certain of our and our Guarantors’ other assets (including certain accounts receivable and other assets subject to a first priority lien securing the Amex Post-Petition Facility described below), in each case subject to certain exceptions, including an exception for assets which are subject to financing agreements that are entitled to the benefits of Section 1110 of the Bankruptcy Code, to the extent such financing agreements prohibit such liens.

     The DIP Credit Facility includes affirmative, negative and financial covenants that impose substantial restrictions on our financial and business operations, including our ability to, among other things, incur or secure other debt, make investments, sell assets and pay dividends or repurchase stock.

     The financial covenants require us to:

• maintain unrestricted funds in an amount not less than $750 million through May 31, 2006; $1 billion at all times from June 1, 2006, through November 30, 2006; $750 million at all times from

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	December 1, 2006, through February 28, 2007; and $1 billion at all times thereafter (the “Liquidity Covenant ”);
•	not exceed specified levels of capital expenditures during any fiscal quarter; and
•	achieve specified levels of EBITDAR, as defined, for successive trailing 12-month periods through March 2008. During 2005, we are required to achieve increasing levels of EBITDAR, including EBITDAR of $644 million for the 12-month period ending December 31, 2005. Thereafter, the minimum EBITDAR level for each successive trailing 12-month period continues to increase, including $1.372 billion for the 12-month period ended December 31, 2006; $1.988 billion for the 12-month period ending December 31, 2007; and $2 billion for each 12-month period ending thereafter. If our cash on hand exceeds the minimum cash on hand that we are required to maintain pursuant to the Liquidity Covenant, then the EBITDAR level that we are required to achieve is effectively reduced by the amount of such excess cash, up to a maximum reduction of $250 million from the required EBITDAR level.

     The DIP Credit Facility contains events of default customary for debtor-in-possession financings, including cross defaults to the Amex Post-Petition Facility and certain change of control events. It is also an event of default if all or substantially all of our flight and other operations are suspended for longer than two days, other than in connection with a general suspension of all U.S. flights, or if certain routes and, subject to certain materiality thresholds, other routes, and slots and gates are revoked, terminated or cancelled. Upon the occurrence of an event of default, the outstanding obligations under the DIP Credit Facility may be accelerated and become due and payable immediately.

Financing Agreement with Amex

     On September 16, 2005, we entered into an agreement (the “Modification Agreement”) with Amex and American Express Bank, F.S.B. pursuant to which we modified certain existing agreements with Amex, including two agreements (the “Amex Pre-Petition Facilities”) under which we had borrowed $500 million from Amex. The Amex Pre-Petition Facilities consist of substantially identical supplements to the two existing agreements under which Amex purchases SkyMiles from us, the Membership Rewards Agreement and the Co-Branded Credit Card Program Agreement (collectively, the “SkyMiles Agreements”).

     As required by the Modification Agreement, on September 16, 2005, we used a portion of the proceeds of our initial borrowing under the DIP Credit Facility to repay the outstanding principal amount of $500 million, together with interest thereon, that we had previously borrowed from Amex under the Amex Pre-Petition Facilities. Simultaneously, pursuant to interim orders issued by the Bankruptcy Court, we borrowed $350 million from Amex pursuant to the terms of the Amex Pre-Petition Facilities as modified by the Modification Agreement (the “Amex Post-Petition Facility”). The amount borrowed under the Amex Post-Petition Facility will be credited, in equal monthly installments, towards Amex’s actual purchases of SkyMiles during the 17-month period commencing in July 2006. Any unused prepayment credit will carryover to the next succeeding month with a final repayment date for any then outstanding advances no later than November 30, 2007. The outstanding advances will bear a fee, equivalent to interest, at a rate of LIBOR plus a margin of 10.25%.

     On October 7, 2005, pursuant to Amendment No. 1 to the Modification Agreement, Amex consented to the above-described increased principal amount of the DIP Credit Facility in return for a prepayment of $50 million under the Amex Post-Petition Facility. The prepayment will be credited in inverse order of monthly installments during the 17-month period commencing in July 2006.

     Our obligations under the Amex Post-Petition Facility are guaranteed by the Guarantors of the DIP Credit Facility. Our obligations under certain of our agreements with Amex, including our obligations under the Amex Post-Petition Facility, the SkyMiles Agreements and the agreement pursuant to which Amex processes travel and other purchases made from us using Amex credit cards (“Card Services Agreement”), and the corresponding obligations of the Guarantors, are secured by (1) a first priority lien on

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our right to payment from Amex for purchased SkyMiles, our interest in the SkyMiles Agreements and related assets and our right to payment from Amex under and our interest in the Card Services Agreement and (2) a junior lien on the collateral securing the DIP Credit Facility.

     With certain exceptions, the Amex Post-Petition Facility contains affirmative, negative and financial covenants substantially the same as in the DIP Credit Facility. The Amex Post-Petition Facility contains customary events of default, including cross defaults to our obligations under the DIP Credit Facility and to defaults under certain other of our agreements with Amex. Upon the occurrence of an event of default under the Amex Post-Petition Facility, the loan under the Amex Post-Petition Facility may be accelerated and become due and payable immediately.

     The DIP Credit Facility and the Amex Post-Petition Facility are subject to an intercreditor agreement that generally regulates the respective rights and priorities of the lenders under each Facility with respect to collateral and certain other matters.

Other

     As is customary in the airline industry, our aircraft lease and financing agreements require that we maintain certain levels of insurance coverage, including war-risk insurance. We were in compliance with these requirements at September 30, 2005. For additional information about our war-risk insurance currently provided by the U.S. Government, see Note 5 in this Form 10-Q.

4. SALE OF ASA

     On September 7, 2005, we completed the sale of Atlantic Southeast Airlines, Inc. (“ASA”), our wholly owned subsidiary, to SkyWest, Inc. (“SkyWest”) for a purchase price of $425 million. In conjunction with the sale of ASA, we amended our contract carrier agreements with ASA and SkyWest Airlines, Inc. (“SkyWest Airlines”), a wholly owned subsidiary of SkyWest, under which they will continue to serve as Delta Connection carriers. The expiration date of these contract carrier agreements has been extended to 2020. The sale resulted in an immaterial gain that was deferred and is being amortized over the life of the ASA contract carrier agreement. For additional information on our contract carrier agreements with ASA and SkyWest, see Note 5 in this Form 10-Q.

     Under the terms of the Stock Purchase Agreement, SkyWest purchased 100% of the outstanding capital stock of ASA. We received $350 million at closing, representing $330 million of purchase price and $20 million related to aircraft deposits, without giving effect to the payment of closing costs. As the result of our assumption of our contract carrier agreements with ASA and SkyWest Airlines in our Chapter 11 proceedings, on November 2, 2005, we received an additional $120 million, consisting of $90 million of deferred purchase price and $30 million in aircraft deposits. Because the purchase price is also subject to a working capital adjustment, as defined in the Stock Purchase Agreement, we may receive up to the full remaining $5 million of deferred purchase price in the first quarter of 2006, depending on resolution of the working capital adjustment. Pursuant to the GE Pre-Petition Facility, we were required to repay $100 million of the outstanding borrowings under that facility upon the completion of our sale of ASA. The remaining proceeds are being used for general corporate purposes.

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     Listed below are the major classes of assets and liabilities that were included as part of the sale:

(in millions)	September 7, 2005
Assets:
Current assets	$	153
Flight equipment, net		1,555
Other property and equipment, net		61
Other assets		33
Total assets	$	1,802
Liabilities:
Current maturities of long-term debt	$	222
Other current liabilities		116
Long-term debt		1,002
Other noncurrent liabilities		8
Total liabilities	$	1,348

     Consistent with the presentation of our other contract carrier arrangements, after the sale of ASA to SkyWest, the revenues and expenses related to ASA are shown as regional affiliates passenger revenues and contract carrier agreements, respectively. Prior to the sale, expenses related to ASA as our wholly owned subsidiary were reported in the applicable expense line item.

5. COMMITMENTS AND CONTINGENCIES

Aircraft Order Commitments

     Commitments for aircraft on firm order as of September 30, 2005 are estimated to be $3.1 billion. The following table shows the timing of these commitments:

Year Ending December 31,
(in millions)	Amount
Three months ending December 31, 2005	$	10
2006		69
2007		477
2008		881
2009		1,615
Total	$	3,052

     Our commitments through December 31, 2006 represent advance deposits on certain aircraft.

Contract Carrier Agreements

Delta Connection Carriers

     We have contract carrier agreements with certain regional air carriers. Under these agreements, the regional air carriers operate certain of their aircraft using our flight code, and we schedule those aircraft, sell the seats on those flights and retain the related revenues. We pay those airlines an amount, as defined in the applicable agreement, which is based on an annual determination of their cost of operating those flights and other factors intended to approximate market rates for those services.

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     During the three and nine months ended September 30, 2005, the following carriers operated as third-party Delta Connection carriers:

	Total Aircraft to be
	Operated Under		Expiration Date
Carrier	Agreement(1)		of Agreement
SkyWest Airlines(2)		56		2020
ASA(2)(3)		179		2020
Chautauqua Airlines, Inc.		39		2016
Shuttle America Corporation(4)		16		2019

⁽¹⁾ Not subject to the review procedures of our Independent Registered Public Accounting Firm.

⁽²⁾ Pursuant to an order of the Bankruptcy Court on October 6, 2005, we assumed our obligations under the amended contract carrier agreements with SkyWest Airlines and ASA and they are not subject to rejection pursuant to Section 365 of the Bankruptcy Code.

⁽³⁾ ASA became a third-party contract carrier on September 8, 2005 upon our sale of all of its outstanding stock to SkyWest. The number of aircraft included in the chart reflects 167 regional jet aircraft and 12 propeller-driven aircraft. The propeller-driven aircraft will be removed from Delta Connection service by the end of 2007.

⁽⁴⁾ In January 2005, we entered into a contract carrier agreement with Republic Airways Holdings, Inc. (“Republic Holdings”) and its wholly owned subsidiary Republic Airline, Inc. (“Republic Airline”). In August 2005, we consented to the assignment of the contract carrier agreement by Republic Airline to Shuttle America Corporation (“Shuttle America”), also a wholly owned subsidiary of Republic Holdings.

     In May 2005, we entered into a contract carrier agreement with Mesa Air Group, Inc. (“Mesa”) and its wholly owned subsidiary, Freedom Airlines, Inc. (“Freedom”). Under this agreement, Freedom will operate 25-30 regional jet aircraft for us. We began placing these aircraft in service under the Delta Connection program in October 2005. Our contract carrier agreement with Mesa and Freedom expires in 2017.

     The following table shows the available seat miles (“ASMs”) and revenue passenger miles (“RPMs”) operated for us under contract carrier agreements with:

• Chautauqua Airlines, Inc. (“Chautauqua”) and SkyWest Airlines for all periods presented,

• Flyi, Inc. (formerly Atlantic Coast Airlines) for the three and nine months ended September 30, 2004,

• Shuttle America from September 1, 2005, to September 30, 2005, and

• ASA from September 8, 2005, to September 30, 2005. On September 7, 2005, we completed the sale of ASA to SkyWest.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2005		2004		2005		2004
ASMs(1)		1,923		1,419		4,659		4,196
RPMs(1)		1,376		1,055		3,359		3,016
Number of aircraft operated, end of period(1)		251		126		251		126

⁽¹⁾ Not subject to the review procedures of our Independent Registered Public Accounting Firm.

Contingencies Related to Termination of Contract Carrier Agreements

     Under the ASA and SkyWest contract carrier agreements, beginning in 2015, with certain advance notice, we may terminate the agreements with respect to any aircraft upon the date that the lease or mortgage covering that aircraft expires. Under certain circumstances, SkyWest (but not ASA) may have the right to replace some of the aircraft terminated from its contract carrier agreement.

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     We may terminate the Chautauqua and Shuttle America agreements without cause at any time after May 2010 and January 2013, respectively, by providing certain advance notice. If we terminate either the Chautauqua or Shuttle America agreements without cause, Chautauqua or Shuttle America, respectively, has the right to (1) assign to us leased aircraft that the airline operates for us, provided we are able to continue the leases on the same terms the airline had prior to the assignment and (2) require us to purchase or lease any of the aircraft that the airline owns and operates for us at the time of the termination. If we are required to purchase aircraft owned by Chautauqua or Shuttle America, the purchase price would be equal to the amount necessary to (1) reimburse Chautauqua or Shuttle America for the equity it provided to purchase the aircraft and (2) repay in full any debt outstanding at such time that is not being assumed in connection with such purchase. If we are required to lease aircraft owned by Chautauqua or Shuttle America, the lease would have (1) a rate equal to the debt payments of Chautauqua or Shuttle America for the debt financing of the aircraft calculated as if 90% of the aircraft was debt financed by Chautauqua or Shuttle America and (2) other specified terms and conditions. We estimate that the total fair values, determined as of December 31, 2004, of the aircraft that Chautauqua or Shuttle America could assign to us or require that we purchase if we terminate without cause our contract carrier agreements with those airlines are approximately $500 million and $365 million, respectively. The actual amount that we may be required to pay in these circumstances may be materially different from these estimates.

     We may terminate the Mesa agreement without cause at any time after 2012 by providing certain advance notice. If we terminate the Mesa agreement without cause after 2012, we will not have any financial obligation to Mesa.

Legal Contingencies

     We are involved in various pre-petition legal proceedings relating to antitrust matters, employment practices, environmental issues and other matters concerning our business. We are also a defendant in numerous lawsuits arising out of the terrorist attacks of September 11, 2001. We cannot reasonably estimate the potential loss for certain legal proceedings because, for example, the litigation is in its early stages or the plaintiff does not specify the damages being sought. Although the ultimate outcome of these matters cannot be predicted with certainty and could have a material adverse effect on our Condensed Consolidated Financial Statements, management believes that the resolution of these actions will not have a material adverse effect on our Condensed Consolidated Financial Statements.

     As a result of our Chapter 11 proceedings, virtually all pre-petition pending litigation against us is stayed and related amounts accrued have been classified in liabilities subject to compromise on the Consolidated Balance Sheet at September 30, 2005.

Other Contingencies

Regional Airports Improvement Corporation (“RAIC”)

     We have obligations under a facilities agreement with the RAIC to pay the bond trustee amounts sufficient to pay the debt service on $47 million in Facilities Sublease Refunding Revenue Bonds. These bonds were issued in 1996 to refinance the construction of certain airport and terminal facilities we use at Los Angeles International Airport. We also provide a guarantee to the bond trustee covering payment of the debt service.

General Indemnifications

     We are the lessee under many real estate leases. It is common in these commercial lease transactions for us, as the lessee, to agree to indemnify the lessor and other related third parties for tort, environmental and

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other liabilities that arise out of or relate to our use or occupancy of the leased premises. This type of indemnity would typically make us responsible to indemnified parties for liabilities arising out of the conduct of, among others, contractors, licensees and invitees at or in connection with the use or occupancy of the leased premises. This indemnity often extends to related liabilities arising from the negligence of the indemnified parties, but usually excludes any liabilities caused by either their sole or gross negligence and their willful misconduct.

     Our aircraft and other equipment lease and financing agreements typically contain provisions requiring us, as the lessee or obligor, to indemnify the other parties to those agreements, including certain related parties, against virtually any liabilities that might arise from the condition, use or operation of the aircraft or such other equipment.

     We believe that insurance would cover most of our exposure to such liabilities and related indemnities associated with the types of lease and financing agreements described above, including real estate leases.

     Certain of our aircraft and other financing transactions include provisions which require us to make payments to preserve an expected economic return to the lenders if that economic return is diminished due to certain changes in law or regulations. In certain of these financing transactions, we also bear the risk of certain changes in tax laws that would subject payments to non-U.S. lenders to withholding taxes.

     We cannot reasonably estimate our potential future payments under the indemnities and related provisions described above because we cannot predict (1) when and under what circumstances these provisions may be triggered and (2) the amount that would be payable if the provisions were triggered because the amounts would be based on facts and circumstances existing at such time. We also cannot predict the impact, if any, that our Chapter 11 proceedings might have on these obligations.

Employees Under Collective Bargaining Agreements

     At September 30, 2005, we had a total of approximately 58,000 full-time equivalent employees. Approximately 17% of these employees, including all of our pilots, are represented by labor unions. On November 1, 2005, we filed a motion with the Bankruptcy Court to reject Delta's CBA covering its pilots. For additional information see Note 2 of this Form 10-Q.

GECC Aircraft

     In November 2004, as a condition to availability of the GE Pre-Petition Facility, we granted GECC the right, exercisable until November 2, 2005, to lease to us (or, at our option, subject to certain conditions, certain Delta Connection carriers) up to 12 CRJ-200 aircraft. During the March 2005 quarter, GECC exercised this right with respect to all 12 CRJ-200 aircraft. These leases have terms of 150 to 168 months. We estimate that our total lease payments for these 12 aircraft will be approximately $190 million over the applicable lease terms. We believe that the lease payments approximate current market rates. As of September 30, 2005, we were leasing all 12 CRJ-200 aircraft.

Sale of Aircraft

     In 2003, we entered into an agreement to sell 11 B-737-800 aircraft to a third party immediately after those aircraft were delivered to us by the manufacturer in 2005. We agreed to pay the third party, for a designated period with respect to each of the 11 B-737-800 aircraft, an amount equal to the excess, if any, of a specified rate over the rate at which the third party leases the aircraft to another party. The maximum undiscounted amount we could have been required to pay for all 11 aircraft totaled approximately $70 million. During the nine months ended September 30, 2005, we sold these aircraft to the third party, which leased those aircraft to other airlines at rates that did not require us to make any payment under the provision discussed above.

War-Risk Insurance Contingency

     As a result of the terrorist attacks on September 11, 2001, aviation insurers (1) significantly reduced the maximum amount of insurance coverage available to commercial air carriers for liability to persons (other than employees or passengers) for claims resulting from acts of terrorism, war or similar events and (2)

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significantly increased the premiums for such coverage and for aviation insurance in general. Since September 24, 2001, the U.S. government has been providing U.S. airlines with war-risk insurance to cover losses, including those resulting from terrorism, to passengers, third parties (ground damage) and the aircraft hull. The coverage currently extends through December 31, 2005. The U.S. government is considering legislative options to extend some or all of the war-risk insurance provided to U.S. airlines beyond December 31, 2005; however, there can be no assurance that such an extension will occur. The withdrawal of government support of airline war-risk insurance would require us to obtain war-risk insurance coverage commercially, if available. Such commercial insurance could have substantially less desirable coverage than currently provided by the U.S. government, may not be adequate to protect our risk of loss from future acts of terrorism, may result in a material increase to our operating expenses and may not be obtainable at all, resulting in an interruption to our operations.

Other

     We have certain contracts for goods and services that require us to pay a penalty, acquire inventory specific to us or purchase contract specific equipment, as defined by each respective contract. These obligations are contingent upon whether we terminate the contract without cause prior to its expiration date; therefore, no obligation would exist unless such a termination was to occur. We also cannot predict the impact, if any, that our Chapter 11 proceedings might have on these obligations.

6. EMPLOYEE BENEFIT PLANS

Settlement and Curtailment Charges

     During the three and nine months ended September 30, 2005, we recorded settlement charges totaling $86 million and $258 million, respectively, in our Condensed Consolidated Statements of Operations. These charges relate to our defined benefit pension plan for pilots (“Pilot Plan”) and result from lump sum distributions to pilots who retired. We recorded these charges in accordance with SFAS No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits” (“SFAS 88”). SFAS 88 requires settlement accounting if the cost of all settlements, including lump sum retirement benefits paid, in a year exceeds, or is expected to exceed, the total of the service and interest cost components of net periodic pension cost for the same period.

     During the March 2005 quarter, we recorded a curtailment charge of approximately $447 million in our Consolidated Statement of Operations related to our Pilot Plan and our defined benefit pension plan for nonpilot employees (“Nonpilot Plan”). This charge reflects the impact of the planned reduction of 6,000-7,000 nonpilot jobs announced in November 2004 and the freeze of service accruals under the Pilot Plan effective December 31, 2004. We recorded this charge in accordance with SFAS 88, which requires curtailment accounting when an event occurs that significantly reduces the expected years of future service of current employees or that eliminates future benefit accruals for a significant number of employees. There were no curtailment charges during the June 2005 and September 2005 quarters.

     In connection with these charges, we remeasured the benefit obligations for the Pilot Plan as of November 30, 2004, December 31, 2004, March 31, 2005 and June 30, 2005; and the Nonpilot Plan as of November 30, 2004, in accordance with SFAS No. 87, “Employers’ Accounting for Pensions”. As a result of the remeasurements, we recorded adjustments to our additional minimum pension liabilities. During the three and nine months ended September 30, 2005, these adjustments totaled an increase of $405 million and a net decrease of $76 million, respectively.

     During the September 2005 quarter, we announced our intention to amend the Nonpilot Plan to freeze benefit accruals effective December 31, 2005. Based on this announcement, we expect to record a curtailment adjustment related to the Nonpilot Plan. We also expect to record an additional settlement charge related to the Pilot Plan in the December 2005 quarter due to lump sum retirement payments paid to retiring pilots during the three months ended September 30, 2005. These amounts cannot be determined at this time because they are subject to certain assumptions that are not yet final.

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     Net Periodic Benefit Costs

          Net periodic benefit cost for the three months ended September 30, 2005 and 2004, included the following components:

							Other
	Pension						Postretirement
	Benefits						Benefits
(in millions)	2005			2004			2005			2004
Service cost	$	32		$	58		$	4		$	7
Interest cost		178			189			29			29
Expected return on plan assets		(148	)		(162	)		—			—
Amortization of prior service cost (benefit)		—			4			(10	)		(21	)
Recognized net actuarial loss		42			50			3			1
Amortization of net transition obligation		2			2			—			—
Settlement charge		86			14			—			—
Net periodic benefit cost	$	192		$	155		$	26		$	16

          Net periodic benefit cost for the nine months ended September 30, 2005 and 2004 included the following components:

							Other
	Pension						Postretirement
	Benefits						Benefits
(in millions)	2005			2004			2005			2004
Service cost	$	124		$	176		$	13		$	22
Interest cost		539			565			85			92
Expected return on plan assets		(454	)		(496	)		—			—
Amortization of prior service cost (benefit)		3			12			(30	)		(59	)
Recognized net actuarial loss		127			145			9			5
Amortization of net transition obligation		6			6			—			—
Curtailment charge		447			—			—			—
Settlement charge		258			131			—			—
Net periodic benefit cost	$	1,050		$	539		$	77		$	60

     In the nine months ended September 30, 2005, we contributed approximately $325 million to our defined benefit pension plans and approximately $65 million to our defined contribution pension plans. We expect to contribute approximately $35 million to our defined contribution plans in the December 2005 quarter. We expect funding for our defined benefit plans in the December 2005 quarter to be immaterial, as substantially all of these funding requirements relate to benefits earned prior to our Petition Date and we believe we are not required to make contributions for such benefits at this time.

     We currently cannot predict whether our defined benefit plans will continue upon emergence from Chapter 11. If they do continue, we may be required to fully fund required contributions at that date, including contributions related to benefits earned prior to our Petition Date.

     For additional information about our benefit plans, see Note 10 of the Notes to the Consolidated Financial Statements in our Form 10-K.

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7. INCOME TAXES

     Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. The following table shows significant components of our deferred tax assets and liabilities at September 30, 2005 and December 31, 2004:

	September 30,			December 31,
(in millions)	2005			2004
Net operating loss carryforwards	$	3,224		$	2,848
Additional minimum pension liability		1,449			1,427
AMT credit carryforwards		346			346
Other temporary differences (primarily employee related benefits)		2,617			2,260
Valuation allowance		(3,371	)		(2,400	)
Total deferred tax assets		4,265			4,481
Temporary differences (primarily depreciation and amortization)		(4,313	)		(4,562	)
Total deferred tax liabilities		(4,313	)		(4,562	)
Net deferred tax liabilities	$	(48	)	$	(81	)

     The following table shows the current and noncurrent deferred assets (liabilities), net recorded on our Consolidated Balance Sheets at September 30, 2005 and December 31, 2004:

	September 30,			December 31,
(in millions)	2005			2004
Current deferred tax assets, net (1)	$	13		$	35
Noncurrent deferred tax liabilities, net (2)		(61	)		(116	)
Net deferred tax liabilities	$	(48	)	$	(81	)

⁽¹⁾ Current deferred tax assets, net are recorded in prepaid expenses and other on our Consolidated Balance Sheets.

⁽²⁾ Noncurrent deferred tax liabilities, net are recorded in other noncurrent liabilities on our Consolidated Balance Sheets.

     In accordance with SFAS No. 109, “Accounting for Income Taxes” (“SFAS 109”), the current and noncurrent components of our deferred tax balances are generally based on the balance sheet classification of the asset or liability creating the temporary difference. If the deferred tax asset or liability is not related to a component of our balance sheet, such as our net operating loss carryforwards, the classification is presented based on the expected reversal date of the temporary difference. Our valuation allowance has been classified as current or noncurrent based on the percentages of current and noncurrent deferred tax assets to total deferred tax assets.

     At September 30, 2005, we had $346 million of federal alternative minimum tax (AMT) credit carryforwards, which do not expire. We also had federal and state pretax net operating loss (NOL) carryforwards of approximately $8.4 billion at September 30, 2005, substantially all of which will not begin to expire until 2022. Our ability to utilize AMT and NOL carryforwards will be subject to significant limitation if, as a result of our Chapter 11 filings, we undergo an ownership change for purposes of Section 382 of the Internal Revenue Code of 1986, as amended. This could result in the need for an additional valuation allowance, which may be material.

Valuation Allowance

     SFAS 109 requires us to periodically assess whether it is more likely than not that we will generate sufficient taxable income to realize our deferred income tax assets. In making this determination, we consider all available positive and negative evidence and make certain assumptions. We consider, among other things, our deferred tax liabilities; the overall business environment; our historical earnings and losses; our industry’s historically cyclical periods of earnings and losses; and our outlook for future years.

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     During the June 2004 quarter, we determined that it was unclear as to the timing of when we will generate sufficient taxable income to realize our deferred tax assets. Accordingly, we recorded an additional valuation allowance against our deferred income tax assets, which resulted in a $1.2 billion income tax provision on our 2004 Consolidated Statement of Operations.

     During the three months ended September 30, 2005, we recorded income tax expense totaling $23 million. For the nine months ended September 30, 2005, we recorded an income tax benefit totaling $139 million. These amounts are primarily the result of (1) adjustments to our deferred tax asset valuation allowance due to changes in the deferred tax asset related to our additional minimum pension liability (see Note 6 in this Form 10-Q) and (2) the recognition of tax benefits for a portion of our current period losses as a result of an analysis of our estimated required valuation allowance at December 31, 2005.

8. SHAREOWNERS’ DEFICIT

     During the nine months ended September 30, 2005, we distributed from treasury (1) 38 million shares of our common stock for redemptions of our Series B ESOP Convertible Preferred Stock (“ESOP Preferred Stock”) under the Delta Family-Care Savings Plan and (2) a total of 34,871 shares of our common stock primarily under the Non-Employee Directors’ Stock Plan, which was terminated November 1, 2005. As a result of our Chapter 11 filing, we are no longer redeeming shares of our ESOP Preferred Stock. For additional information about our stock compensation plans and the ESOP Preferred Stock, see Note 11 of the Notes to the Consolidated Financial Statements in our Form 10-K.

     Due to the distribution of the 38 million shares from treasury at a value below the average price paid for those shares, there is a decrease in treasury stock at cost of approximately $1.8 billion with a corresponding decrease in additional paid-in capital on the Consolidated Balance Sheets.

     At our Annual Meeting of Shareowners held on May 19, 2005, shareowners approved an amendment to our Certificate of Incorporation to increase the number of shares of common stock that we are authorized to issue from 450 million to 900 million and to decrease the par value of the common stock from $1.50 per share to $0.01 per share. As a result of this amendment, common stock decreased and additional paid-in capital increased by the same amount, $289 million.

9. COMPREHENSIVE LOSS

     Comprehensive loss primarily includes (1) reported net loss, (2) accounting for our additional minimum pension liabilities and (3) accounting for a deferred tax asset valuation allowance related to additional minimum pension liabilities. The following table shows our comprehensive loss for the three and nine months ended September 30, 2005 and 2004:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in millions)	2005			2004			2005			2004
Net loss, as reported	$	(1,130	)	$	(646	)	$	(2,583	)	$	(2,992	)
Other comprehensive (loss) income		(381	)		17			(171	)		68
Comprehensive loss	$	(1,511	)	$	(629	)	$	(2,754	)	$	(2,924	)

     The following table shows the components of our accumulated other comprehensive loss balance at September 30, 2005, and the activity for the nine months then ended:

	Additional
	Minimum						Marketable
	Pension			Valuation			Equity
(in millions)	Liability			Allowance			Securities		Total
Balance at December 31, 2004	$	(2,329	)	$	(29	)	$	—	$	(2,358	)
Minimum pension liability adjustments		(58	)		—			—		(58	)
Unrealized gain		—			—			1		1
Tax effect		23			(137	)		—		(114	)
Net of tax		(35	)		(137	)		1		(171	)
Balance at September 30, 2005	$	(2,364	)	$	(166	)	$	1	$	(2,529	)

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     For information about our additional minimum pension liability, see Note 6 in this Form 10-Q and Note 10 of the Notes to the Consolidated Financial Statements in our Form 10-K. For information about the income tax impact associated with our additional minimum pension liability, see Note 7 in this Form 10-Q.

10. GEOGRAPHIC INFORMATION

     We are managed as a single business unit that provides air transportation for passengers and cargo. For additional information about how we manage our business, see Note 13 of the Notes to the Consolidated Financial Statements in our Form 10-K. Our operating revenues by geographic region are summarized in the following table:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2005		2004		2005		2004
North America	$	3,316	$	3,075	$	9,628	$	9,217
Atlantic		677		600		1,747		1,581
Latin America		184		157		559		455
Pacific		39		39		114		108
Total	$	4,216	$	3,871	$	12,048	$	11,361

11. RESTRUCTURING

Restructuring and Other Reserves

     The following table shows our restructuring and other reserve balances as of September 30, 2005, and the activity for the nine months then ended for restructuring costs recorded in prior years related to (1) facility closures and other costs and (2) severance and related costs under our 2004 workforce reduction programs:

	Facilities			Severance and
(in millions)	and Other			Related Costs
Balance at December 31, 2004	$	38		$	42
Additional costs and expenses		6			—
Payments		(7	)		(30	)
Adjustments		—			(4	)
Balance at September 30, 2005	$	37		$	8

     The facilities and other reserve represents costs related primarily to (1) future lease payments on closed facilities, (2) contract termination fees and (3) future lease payments on aircraft retired early.

     During the March 2005 quarter, we removed from service six B-737-200 aircraft prior to their lease expiration dates. As a result of these retirements, we recorded a $10 million charge in pension settlements, asset writedowns, restructuring and related items, net on our Consolidated Statement of Operations. This charge includes (1) $7 million for the impairment of two aircraft retired under capital leases and (2) $3 million related to future lease payments for four aircraft retired under operating leases, which is recorded in the facilities and other reserve in the table above.

     During the June 2005 quarter, we retired 11 leased B-737-200 and B-737-300 aircraft and one owned B-767-200 aircraft. There was no charge related to either of these retirements.

     During the September 2005 quarter, we retired eight leased B-737-200 aircraft and three owned B-767-200 aircraft. As a result of five of the B-737-200 leased aircraft retirements, we recorded a $3 million charge which is included in the facilities and other reserve in the table above. In accordance with SOP 90-7, substantially all of our restructuring and other reserves were classified in liabilities subject to compromise on the September 30, 2005 Consolidated Balance Sheet.

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     During the September 2005 quarter, we announced an expanded transformation plan, which includes our intention to eliminate 7,000 to 9,000 jobs system-wide by the end of 2007. We are currently not able to reasonably estimate the amount and timing of any charges related to these actions since they are subject to certain assumptions that are not yet final.

     For additional information about our charges for restructuring and related items recorded in prior years, see Notes 14 and 15 of the Notes to the Consolidated Financial Statements in our Form 10-K.

12. EARNINGS (LOSS) PER SHARE

     We calculate basic earnings (loss) per share by dividing the income (loss) available to common shareowners by the weighted average number of common shares outstanding. Diluted earnings (loss) per share includes the dilutive effects of stock options and convertible securities. To the extent stock options and convertible securities are anti-dilutive, they are excluded from the calculation of diluted earnings (loss) per share. The following table shows our computation of basic and diluted loss per share:

	Three Months						Nine Months
	Ended						Ended
	September 30,						September 30,
(in millions, except per share data)	2005			2004			2005			2004
BASIC AND DILUTED:
Net loss	$	(1,130	)	$	(646	)	$	(2,583	)	$	(2,992	)
Dividends on allocated Series B ESOP Convertible Preferred Stock		(4	)		(5	)		(15	)		(14	)
Net loss available to common shareowners	$	(1,134	)	$	(651	)	$	(2,598	)	$	(3,006	)
Weighted average shares outstanding		168.4			126.2			152.2			124.9
Basic and diluted loss per share	$	(6.73	)	$	(5.16	)	$	(17.07	)	$	(24.06	)

For the three and nine months ended September 30, 2005 and 2004, we excluded from our loss per share calculations all common stock equivalents, which primarily include stock options, our ESOP Preferred Stock and shares of common stock issuable upon conversion of our 8.0% Convertible Senior Notes due 2023 and our 2 7/8% Convertible Senior Notes due 2024, because their effect on loss per share was anti-dilutive. The common stock equivalents totaled 141 million shares and 80 million shares for the three months ended September 30, 2005 and 2004, respectively, and 145 million shares and 78 million shares for the nine months ended September 30, 2005 and 2004, respectively.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Business Environment

Chapter 11 Reorganization

     We recorded an unaudited consolidated net loss of $2.6 billion for the nine months ended September 30, 2005. During the four years ended December 31, 2004, we reported an aggregate consolidated net loss of approximately $8.5 billion. In response to fundamental and permanent changes in the airline industry that contributed significantly to our losses, we implemented profit improvement initiatives during the last several years. These initiatives became the basis for our transformation plan announced in late 2004. Our initial transformation plan has a goal of providing us with approximately $5 billion in annual benefits by the end of 2006 (as compared to 2002), primarily through cost reductions. We are on track to obtain the full $5 billion in benefits by the end of 2006 and as of September 30, 2005, we have implemented initiatives intended to achieve approximately 90% of these benefits.

     The benefits we are realizing under our transformation plan are, however, being outpaced and masked by historically high aircraft fuel prices, which are having a material adverse effect on our financial performance. During the nine months ended September 30, 2005, our aircraft fuel expense increased 55%, or $1.1 billion, compared to the corresponding period in 2004. In addition, we continue to operate in a weak pricing environment, which limits our ability to increase fares to offset high fuel costs and is also having a material negative impact on our financial results. Although revenue passenger miles (“RPMs”), or traffic, rose 8% in the nine months ended September 30, 2005, compared to the same period in 2004, passenger revenue increased only 6% due to a 2% decrease in passenger mile yield on a year-over-year basis.

     As a result of a liquidity shortfall caused by historically high aircraft fuel prices and other cost pressures, low passenger mile yields and cash holdbacks required by credit card processors, we determined that we could not continue to operate outside of the protections afforded by Chapter 11 of the Bankruptcy Code. Therefore, on September 14, 2005 (the “Petition Date”), we and substantially all of our subsidiaries (collectively, the “Debtors”) filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”), in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). The reorganization cases are being jointly administered under the caption, “In re Delta Air Lines, Inc., et al., Case No. 05-17923-PCB.”

     The Debtors will operate as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. In general, as debtors-in-possession, we and the other Debtors are authorized under Chapter 11 to continue to operate as an ongoing business, but may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court.

     On September 16, 2005, the Bankruptcy Court granted interim approval of first day motions to facilitate our continuation of normal operations. The Bankruptcy Court’s orders authorized us, among other things, in our discretion to: (1) provide employee wages, healthcare coverage, vacation, sick leave and similar benefits without interruption; (2) honor obligations arising prior to the Petition Date (“pre-petition obligations”) to customers and continue customer service programs, including Delta’s SkyMiles frequent flyer program; (3) pay for fuel under existing fuel supply contracts and honor existing fuel supply, distribution and storage agreements; (4) honor pre-petition obligations related to our interline, clearinghouse, code sharing and other similar agreements; (5) pay pre-petition obligations to foreign vendors, foreign service providers and foreign governments; and (6) continue maintenance of existing bank accounts and existing cash management systems.

     In connection with the Chapter 11 proceedings, we arranged for post-petition financing initially in an aggregate amount of $2.05 billion. On September 16, 2005, the Bankruptcy Court granted our request for interim orders authorizing our entering into definitive agreements for these financings, which are further described below under the heading “Financial Condition and Liquidity” and in Note 3 of the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q. On that date, we borrowed $1.75 billion of the original total amount of $2.05 billion committed under the agreements for the financings. Final approval of our post-petition financing, which included a net increase of the aggregate amount of the financing to $2.2 billion, was granted by the Bankruptcy Court on October 6, 2005, and we borrowed the remaining amount on October 7, 2005.

     Shortly after the Chapter 11 filing, the Debtors began notifying all known current or potential creditors of the Chapter 11 filing. Subject to certain exceptions under the Bankruptcy Code, the Debtors’ Chapter 11 filing automatically enjoined, or stayed, the continuation of any judicial or administrative proceedings or other actions against the Debtors or their property to recover on, collect or secure a claim arising prior to the Petition Date. Thus, for example, most creditor actions to obtain possession of property from the Debtors, or to create, perfect or enforce any lien against the property of the Debtors, or to collect on monies owed or otherwise

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exercise rights or remedies with respect to a pre-petition claim are enjoined unless and until the Bankruptcy Court lifts the automatic stay.

     As required by the Bankruptcy Code, the United States Trustee for the Southern District of New York has appointed an official committee of unsecured creditors (the “Creditors’ Committee”). The Creditors Committee and its legal representatives have a right to be heard on all matters that come before the Bankruptcy Court with respect to the Debtors. There can be no assurance that the Creditors’ Committee will support the Debtors’ positions or ultimate plan of reorganization, once proposed. Disagreements between the Debtors and the Creditors’ Committee could protract the Chapter 11 proceedings, negatively impact the Debtors’ ability to operate and could delay the Debtors’ emergence from the Chapter 11 proceedings.

     The Debtors will file with the Bankruptcy Court schedules and statements of financial affairs setting forth, among other things, the assets and liabilities of the Debtors, subject to the assumptions contained in certain notes filed in connection therewith. All of the schedules will be subject to further amendment or modification. Differences between amounts scheduled by the Debtors and claims by creditors will be investigated and resolved in connection with the claims resolution process. In light of the expected number of creditors of the Debtors, the claims resolution process may take considerable time to complete. Accordingly, the ultimate number and amount of allowed claims is not presently known, nor can the ultimate recovery with respect to allowed claims be presently ascertained.

Expansion of our Transformation Plan

     As a part of our Chapter 11 reorganization, we are now expanding our transformation plan to achieve an additional $3 billion in annual financial benefits (revenue enhancements or cost reductions) by the end of 2007 above the approximately $5 billion in annual benefits we are on track to deliver by the end of 2006 (as compared to 2002). Our expanded transformation plan is intended to make Delta a smaller, more cost-efficient airline with a strengthened network and improved financial condition. The expanded transformation plan has the following specific objectives:

• achieve a long-term viable cash flow and operating results;

• create a cost structure that is competitive with low cost carriers;

• share sacrifices equitably among all constituents;

• ensure that our cost reductions are sustainable in order to maintain compliance with financial covenants in our post-petition financing and secure a proper balance of equity and debt financing to enable our successful emergence from bankruptcy; and

• sustain employee morale and provide superior customer service.

     The expanded transformation plan is intended to achieve these objectives by combining planned revenue and network productivity improvements with savings to be achieved through the Chapter 11 restructuring process and more competitive employment costs.

     Revenue and Network Productivity Improvements. The expanded transformation plan targets $1.1 billion in benefits to be realized annually through revenue and network productivity improvements. Key initiatives include:

• achieving financial benefits from the simplification of our fleet;

• right-sizing capacity to better meet customer demand, including reducing domestic mainline capacity by 15-20% due to over-capacity in the U.S. market;

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• growing international presence with a 25% increase in capacity in 2006 to pursue routes with greater profit potential; and

• increasing point-to-point flying and right-sizing and simplifying our domestic hubs to achieve a greater local traffic mix.

     On September 7, 2005, we announced plans to strengthen our domestic hubs and grow international schedules during the upcoming winter season. We will reduce capacity by approximately 25% at Cincinnati beginning December 1, 2005, with the intention of increasing the percentage of local hub Cincinnati traffic from approximately 35% to nearly 50%. To respond to increased demand for service to emerging business and leisure destinations, we plan to increase international capacity by approximately 25% by the summer of 2006 in comparison to our schedule in the summer of 2005, with a focus on routes to Europe, Latin America and the Caribbean. For example, our winter 2005-2006 schedule adds new service to cities in such countries as Germany, Honduras, Jamaica, Nicaragua, and Denmark. In addition, we recently announced new transatlantic service to cities in the United Kingdom, Ireland, Hungary, France, Greece and Italy that we expect will begin in May and June 2006.

     As part of our revenue and network productivity improvements, we announced that Song’s service will merge into Delta’s in May 2006. We plan to add 26 First Class seats to each of the 48 757-200 aircraft now operating in Song’s service; convert an additional 50 or more mainline aircraft to two-class Song service; and expand Song’s personal digital in-flight entertainment system to the converted aircraft. These changes will grow Song’s service to all transcontinental mainline routes beginning in the fall of 2006 and all routes over 1,750 miles by the end of 2007.

     In-Court Restructuring. The expanded transformation plan includes a target of $970 million of cost reductions to be realized annually through in-court restructuring initiatives such as debt relief, lease and facility savings, aircraft lease rejections and negotiations and restructuring of vendor contracts. We began this process by rejecting leases on 40 aircraft that we were not operating at the time of our Chapter 11 filing. We plan to reduce our fleet by an additional 80-plus aircraft by the end of 2006. This plan accelerates by two years our earlier plan to reduce aircraft fleet complexity by four types. We plan to operate seven mainline aircraft types by the end of 2006 – down from 11 currently and 14 as recently as 2001.

     Competitive Employment Costs. Our expanded transformation plan also targets $930 million of benefits to be realized annually through reduced employment costs. These reductions are planned to result from changes to pay and benefits for our employees, as well as employee productivity improvements, outsourcing and overhead reductions. The total targeted benefit represents annual, ongoing labor cost reductions of $325 million from our pilots and $605 million from our non-pilot workforce – including management.

     After attempting to reach a consensual agreement with the Air Line Pilots Association, International (“ALPA”), which represents our pilots, to reduce our pilot labor costs, we filed a motion on November 1, 2005 with the Bankruptcy Court under Section 1113 of the Bankruptcy Code to reject our collective bargaining agreement with ALPA. We expect to continue to negotiate with ALPA to reach a consensual agreement that will allow us to achieve the required labor cost reductions. We cannot predict the outcome of these negotiations or, if we are unable to reach a consensual agreement with ALPA, the outcome of the Bankruptcy Court’s decision with respect to our motion.

     Specific components of non-pilot employment changes include:

• Reducing pay at all levels of management. This includes a 25% pay reduction for our Chief Executive Officer; a 15% reduction for other officers; and a 9% reduction for supervisory and other administrative personnel.

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• Reducing pay scales by 7-10% for most front-line employees, excluding those earning less than $25,000 annually.

• Changes to employee benefit programs, including freezing future pension accruals, increased cost sharing for healthcare and reductions in paid time off programs.

• Enhancing profit-sharing to allow all our employees to share in future success from the first dollar of profitability.

     The expanded transformation plan contemplates that approximately 7,000 — 9,000 additional jobs will be eliminated system-wide by the end of 2007. A portion of these reductions contributes to our targeted reduction in employment costs and the remainder contributes to our targeted benefits from revenue and network productivity improvements. We plan to achieve these reductions through previously announced changes to strengthen our route network and right-size our Cincinnati hub, increased outsourcing and reduced overhead. The final number of job reductions will depend in part upon changes to our fleet.

Basis of Presentation

     Our Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), including the provisions of American Institute of Certified Public Accountants’ Statement of Position 90-7, “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code” (“SOP 90-7”), on a going concern basis, which contemplates continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business. Accordingly, our Condensed Consolidated Financial Statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should we be unable to continue as a going concern.

     As a result of our Chapter 11 filing, the realization of assets and satisfaction of liabilities in the ordinary course of business, without substantial adjustments or changes in ownership, are subject to uncertainty. Given this uncertainty, there is substantial doubt about our ability to continue as a going concern.

Results of Operations—Three Months Ended September 30, 2005 and 2004

Net Loss and Loss per Share

     Our unaudited consolidated net loss was $1.1 billion for the September 2005 quarter ($6.73 diluted loss per share), compared to a net loss of $646 million ($5.16 diluted loss per share) in the September 2004 quarter. Our net loss for the three months ended September 30, 2005 and 2004 includes net charges of $692 million and $54 million, respectively. As discussed below, these net charges reflect (1) a net charge of $607 million for reorganization items in the September 2005 quarter and (2) a net charge of $85 million in the September 2005 quarter and $54 million in the September 2004 quarter for pension settlements, asset writedowns, restructuring and related items, net.

Operating Revenues

     Operating revenues totaled $4.2 billion in the September 2005 quarter, a 9% increase compared to the September 2004 quarter. Passenger revenues increased 9% to $3.9 billion, reflecting a 7% increase in RPMs on a capacity increase of 5% and a 2% increase in passenger mile yield to 11.97¢. Passenger Revenue per Available Seat Mile (“Passenger RASM”) increased 4% to 9.48¢, while load factor increased 1.6 points to 79.2%. The increase in passenger mile yield reflects our recent fare increases. For additional information about factors impacting our passenger revenues, see the “Business Environment” section of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K.

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     North American Passenger Revenues - North American passenger revenues increased 8% to $3.0 billion for the September 2005 quarter. RPMs increased 6% on a capacity increase of 3%, while passenger mile yield increased 2%. Passenger RASM increased 5% to 9.60¢, and load factor increased by 2 points. We believe the increase in passenger mile yield reflects various factors, including the increase in our fares, offset by continuing growth of low-cost carriers. We compete with low-cost carriers in most of our domestic markets, particularly at our primary hub in Atlanta and on routes between the Northeast and Florida.

     International Passenger Revenues - International passenger revenues increased 16% to $877 million during the September 2005 quarter. RPMs increased 10% on a capacity increase of 12%, while passenger mile yield increased 5%. Passenger RASM increased 3% to 8.9¢. These increases are primarily due to higher demand in the Atlantic market.

     Cargo and Other Revenues - Cargo revenues increased 9% to $128 million in the September 2005 quarter. This reflects a 28% increase in the cargo ton mile yield offset by a 15% decrease in cargo ton miles. Other revenues increased 4% to $197 million.

Operating Expenses

     Operating expenses were $4.5 billion for the September 2005 quarter compared to $4.3 billion for the September 2004 quarter. As discussed below, the increase in operating expenses was primarily due to significantly higher fuel prices in 2005 than in 2004. Operating capacity increased 5% primarily due to operational efficiencies from the redesign of our Atlanta hub from a banked to a continuous hub, which allowed us to increase system-wide capacity with no additional Mainline aircraft. Operating cost per available seat mile (“CASM”) decreased 1% to 10.86¢.

     Salaries and related costs decreased 24%, or $381 million, to $1.2 billion in the September 2005 quarter. This reflects a 17% decrease as a result of salary rate reductions for our pilot and non-pilot employees and a 8% decline due to lower Mainline headcount. These decreases were partially offset by a 5% increase related to higher capacity and a slight increase due to higher seniority-based pay increases.

     Aircraft fuel expense increased 53%, or $417 million, to $1.2 billion, with approximately $389 million of the increase resulting from higher fuel prices, which remain at historically high levels. The average fuel price per gallon increased 52% to $1.82 and total gallons consumed increased 1%. Fare increases implemented in response to rising aircraft fuel prices offset a portion of these cost increases. During the September 2005 quarter, we had no significant hedges or contractual arrangements to reduce our fuel costs below market levels, and we have no such arrangements that would reduce our costs below market levels in future periods. Our fuel cost is shown net of fuel hedge gains of $24 million in the September 2004 quarter.

     Contracted services expense increased 10%, reflecting a variety of items, including a 4% rise from increased capacity and a 2% increase due to the outsourcing of certain human resources functions.

     Contract carrier arrangements expense increased 34% from $234 million during the September 2004 quarter to $313 million during the September 2005 quarter. This increase primarily is due to Atlantic Southeast Airlines, Inc. (“ASA”) becoming a third party contract carrier upon our sale of all of its outstanding common stock to SkyWest Airlines, Inc. (“SkyWest”) on September 7, 2005 partially offset by the termination of our contract carrier arrangement with Flyi, Inc. in 2004. For additional information about our sale of ASA, see Note 4 of the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q.

     Aircraft rent expense decreased 22%, or $40 million, primarily due to our lease restructuring in the December 2004 quarter, which resulted in the reclassification of certain leases from operating leases to capital leases in accordance with Statement of Financial Accounting Standards No. 13, “Accounting for Leases (“SFAS 13”).” For additional information regarding this matter, see Note 6 of the Notes to the

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Consolidated Financial Statements in our Form 10-K. As discussed below, this reclassification increased our interest expense.

     Passenger commissions and other selling expenses decreased 18% or $33 million for the quarter ended September 30, 2005. This primarily reflects lower net expenses associated with the sale of mileage credits in the SkyMiles frequent flyer program to participating partners, such as credit card companies, hotels and car rental companies.

     During the September 2005 quarter, pension settlements, asset writedowns, restructuring and related items, net totaled $85 million. This includes an $86 million settlement charge related to lump sum distributions under our defined benefit pension plan for pilots (“Pilot Plan”). For additional information about this charge and a settlement charge in the December 2005 quarter, see Note 6 of the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q. During the September 2004 quarter, pension settlements, asset writedowns, restructuring and related items, net reflected a $40 million aircraft impairment charge related to our agreement to sell eight owned MD-11 aircraft and a $14 million settlement charge related to the Pilot Plan due to lump sum distributions to pilots who retired.

     Other operating expenses rose 30% or $50 million. This primarily reflects a 22% rise due to growth of our SkyMiles program increasing our frequent flyer liability and a 5% increase from higher fuel related taxes.

Operating Loss and Operating Margin

     We incurred an operating loss of $240 million for the September 2005 quarter, compared to an operating loss of $423 million in the September 2004 quarter. Operating margin, which is the ratio of operating loss to operating revenues, was (5.7%) and (10.9%) for the September 2005 and September 2004 quarters, respectively.

Other Income (Expense)

     Total other expense, net in the September 2005 quarter was $260 million, compared to $229 million in the September 2004 quarter. This reflects a 32%, or $67 million, increase in interest expense to $277 million in the September 2005 quarter, primarily due to higher levels of debt outstanding and higher interest rates as well as additional interest related to the reclassification of certain aircraft leases from operating leases to capital leases in accordance with SFAS 13 as a result of renegotiations during the December 2004 quarter (see discussion of aircraft rent expense above). The increase in interest expense for the quarter was partially offset by a $25 million decrease in miscellaneous expenses due to a reduction in the fair value of our investments in certain companies in 2004.

Reorganization Items, Net

     Reorganization items, net totaled $607 million in the September 2005 quarter. This net charge primarily relates to the valuation of pre-petition debt obligations and the rejection of leased aircraft. For additional information about our reorganization items, see Note 2 of the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q.

Results of Operations—Nine Months Ended September 30, 2005 and 2004

Net Loss and Loss per Share

     Our unaudited consolidated net loss was $2.6 billion for the nine months ended September 30, 2005 ($17.07 diluted loss per share), compared to a net loss of $3.0 billion ($24.06 diluted loss per share) for the nine months ended September 30, 2004. Our net loss for the nine months ended September 30, 2005 and 2004 includes net charges of $1.2 billion and $1.5 billion, respectively. As discussed below, these net charges reflect (1) a net charge of $712 million and $171 million for the nine months ended September 30, 2005 and 2004, respectively, for pension settlements, asset writedowns, restructuring and related items,

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net; (2) a $607 million net charge for reorganization items for the nine months ended September 30, 2005; and (3) a $139 million income tax benefit and a $1.3 billion income tax provision for the nine months ended September 30, 2005 and 2004, respectively.

Operating Revenues

     Operating revenues totaled $12.0 billion for the nine months ended September 30, 2005, a 6% increase compared to the nine months ended September 30, 2004. Passenger revenue increased 6% to $11.1 billion, reflecting an 8% rise in RPMs on a capacity increase of 5% and a 2% decline in passenger mile yield to 12.03¢. Passenger RASM increased 1% to 9.3¢, while load factor increased 2.3 points to 77.4%. The decline in passenger mile yield reflects our lack of pricing power due to the continuing growth of low-cost carriers with which we compete in most of our domestic markets, partially offset by our recent fare increases. High industry capacity and increased price sensitivity by our customers, enhanced by the availability of airline fare information on the Internet also contributed to the decline in passenger mile yield. For additional information about factors impacting our passenger revenues, see the “Business Environment” section of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K.

     North American Passenger Revenues - North American passenger revenues increased 4% to $8.7 billion for the nine months ended September 30, 2005. RPMs increased 7% on a capacity increase of 3% while passenger mile yield fell 3%. Passenger RASM increased slightly to 9.46¢, and load factor increased by 3 points. We believe the decrease in passenger mile yield reflects various factors, including the continuing growth of low-cost carriers. We compete with low-cost carriers in most of our domestic markets, particularly at our primary hub in Atlanta and on routes between the Northeast and Florida.

     International Passenger Revenues - International passenger revenues increased 17% to $2.3 billion during the nine months ended September 30, 2005. RPMs increased 14% on a capacity increase of 14%, while passenger mile yield increased 2%. Passenger RASM increased 3% to 8.56¢, and load factor increased by less than 1 point. These increases are primarily due to higher demand in the Atlantic market.

     Cargo and Other Revenues - Cargo revenues increased 6% to $387 million for the nine months ended September 30, 2005. This reflects an 18% increase in cargo ton mile yield which was partially offset by a 10% decrease in cargo ton miles. Other revenues increased 4% to $556 million.

Operating Expenses

     Operating expenses were $13.4 billion for the nine months ended September 30, 2005, compared to $12.4 billion for the nine months ended September 30, 2004. As discussed below, the increase in operating expenses was primarily due to significant increases in (1) fuel prices and (2) pension settlements, asset writedowns, restructuring and related items, net, which were partially offset by a decrease in salaries and related costs. Operating capacity increased 5% to 119.4 billion ASMs primarily due to operational efficiencies from the redesign of our Atlanta hub from a banked to a continuous hub, which allowed us to increase system-wide capacity with no additional Mainline aircraft. CASM increased 2% to 11.20¢.

     Salaries and related costs decreased 18%, or $865 million, to $3.9 billion in the nine months ended September 30, 2005. This reflects a 17% decrease from salary rate reductions for our pilot and non-pilot employees and a 6% decline due to lower Mainline headcount. These decreases were partially offset by a 4% increase related to higher capacity and a 1% rise due to higher seniority-based pay increases.

     Aircraft fuel expense increased 55%, or $1.1 billion, to $3.1 billion with approximately $1.0 billion of the increase resulting from higher fuel prices, which remain at historically high levels. The average fuel price per gallon increased 51% to $1.62 and total gallons consumed increased 2%. Fare increases implemented during the nine months ended September 30, 2005 in response to rising aircraft fuel prices offset a portion of those cost increases. During the nine months ended September 30, 2005, we had no significant hedges or contractual arrangements to reduce our fuel costs below market levels, and we have

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no such arrangements that would reduce our costs below market levels in future periods. Our fuel cost is shown net of fuel hedge gains of $55 million in the nine months ended September 30, 2004.

     Contracted services expense increased 11% to $817 million, primarily reflecting a 6% rise from increased outsourcing of certain airport functions due to higher capacity and a 1% increase due to the outsourcing of certain human resources functions. Expenses from our contract carrier arrangements increased 3% to $728 million. This primarily reflects a 13% increase due to ASA becoming a third party contract carrier upon our sale of all of its outstanding common stock to SkyWest and a 9% increase from higher fuel prices, partially offset by the termination of our contract carrier arrangement with Flyi, Inc. in 2004. For additional information about our sale of ASA and our contract carrier agreements, see Notes 4 and 5 of the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q, respectively.

     Aircraft maintenance materials and outside repairs expense increased 15%. This primarily reflects a 12% increase from higher outside repairs volume, mainly due to the outsourcing of heavy maintenance visits on certain aircraft types, and a 4% increase due to higher engine volume and workscope. Aircraft rent expense decreased 20% due to our lease restructuring in the December 2004 quarter, which resulted in the reclassification of certain leases from operating leases to capital leases in accordance with SFAS 13 (see Note 7 of the Notes to the Consolidated Financial Statements in our Form 10-K). As discussed below, this reclassification increased our interest expense.

     Passenger commissions and other selling expenses decreased 6%, or $31 million, for the nine months ended September 30, 2005. This primarily reflects lower net expenses associated with the sale of mileage credits in the SkyMiles frequent flyer program to participating partners, such as credit card companies, hotels and car rental companies.

     During the nine months ended September 30, 2005, pension settlements, asset writedowns, restructuring and related items, net totaled $712 million. This primarily includes:

• A $447 million charge for the curtailment of pension benefits related to (1) the previously announced reduction of 6,000-7,000 non-pilot jobs associated with our 2004 workforce reduction program and (2) the freeze of service accruals under the Pilot Plan effective December 31, 2004. For additional information about this charge, see Note 6 of the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q.

• Settlement charges of $258 million, related to lump sum distributions under the Pilot Plan to pilots who retired. For additional information about this charge and a settlement charge in the December 2005 quarter, see Note 6 of the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q.

• A $10 million charge related to the retirement of six B-737-200 aircraft during the March 2005 quarter. For additional information about this charge, see Note 11 of the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q.

     During the nine months ended September 30, 2004, pension settlements, asset writedowns, restructuring and related items, net reflected a $131 million settlement charge related to the Pilot Plan due to lump sum distributions to pilots who retired and a $40 million aircraft impairment charge related to our agreement, entered into in the September 2004 quarter, to sell eight owned MD-11 aircraft.

     Other operating expenses increased 20%, primarily due to a 7% increase from higher fuel taxes, a 7% increase from an adjustment to our frequent flyer liability and a 5% rise from a net increase in sales and use taxes.

Operating Loss and Operating Margin

     We incurred an operating loss of $1.3 billion for the nine months ended September 30, 2005, compared to an operating loss of $1.1 billion for the nine months ended September 30, 2004. Operating margin, which is the ratio of operating income (loss) to operating revenues, was (11.0%) and (9.3%) for the nine months ended September 30, 2005 and 2004, respectively.

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Other Income (Expense)

     Total other expense, net for the nine months ended September 30, 2005, was $789 million, compared to $627 million for the nine months ended September 30, 2004. This mainly reflects a $232 million increase in interest expense for the nine months ended September 30, 2005, due to higher levels of debt outstanding and increased interest rates. The increase also reflects additional interest related to the reclassification of certain aircraft leases from operating leases to capital leases in accordance with SFAS 13 as a result of renegotiations during the December 2004 quarter (see discussion of aircraft rent expense above). The increase in interest expense was partially offset by a $52 million decrease in miscellaneous expenses due primarily to a reduction in the fair value of our investments in certain companies in 2004.

Reorganization Items, Net

     Reorganization items, net for the nine months ended September 30, 2005 was $607 million. This net charge primarily relates to the valuation of pre-petition debt obligations and the rejection of leased aircraft. For additional information about our reorganization items, see Note 2 of the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q.

Income Taxes

     During the nine months ended September 30, 2005, we recorded a $139 million income tax benefit on our Consolidated Statement of Operations. During the nine months ended September 30, 2004, we recorded an additional valuation allowance against our deferred income tax assets, which resulted in a $1.3 billion income tax provision. For additional information about our income taxes, see Note 7 of the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q.

Financial Condition and Liquidity

     The matters described herein, to the extent that they relate to future events or expectations, may be significantly affected by our Chapter 11 proceedings. Those proceedings will involve, or may result in, various restrictions on our activities, limitations on financing, the need to obtain Bankruptcy Court and Creditors’ Committee approval for various matters and uncertainty as to relationships with vendors, suppliers, customers and others whom we may conduct or seek to conduct business.

     Under the priority scheme established by the Bankruptcy Code, unless creditors agree otherwise, pre-petition liabilities and post-petition liabilities must be satisfied in full before shareowners are entitled to receive any distribution or retain any property under a plan of reorganization. The ultimate recovery to creditors and/or shareowners, if any, will not be determined until confirmation of a plan or plans of reorganization. No assurance can be given as to what values, if any, will be ascribed in the Chapter 11 cases to each of these constituencies or what types or amounts of distributions, if any, they would receive. A plan of reorganization could result in holders of our liabilities and/or securities, including our preferred and common stock (the “Common Stock”) receiving no distribution on account of their interests and cancellation of their holdings. If the requirements of Section 1129(b) of the Bankruptcy Code are met, a plan of reorganization can be confirmed notwithstanding its rejection by the holders of our stock and notwithstanding the fact that such holders do not receive or retain any property on account of their equity interests under the plan. Because of such possibilities, the value of our liabilities and securities, including our Common Stock, is highly speculative. We urge that appropriate caution be exercised with respect to existing and future investments in any of our liabilities and/or securities of the Debtors.

Significant Liquidity Events

Debtor-in-Possession Financing

     On September 16, 2005, we entered into a Secured Super-Priority Debtor-in-Possession Credit Agreement (the “DIP Credit Facility”) to borrow up to $1.7 billion from a syndicate of lenders arranged by General Electric Capital Corporation (“GECC”) and Morgan Stanley Senior Funding, Inc. (“Morgan

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Stanley”), for which GECC would act as administrative agent. On October 7, 2005, we entered into an amendment to the DIP Credit Facility (the “Amendment”) to increase the DIP Credit Facility by an additional $200 million, with American Express Travel Related Services Company, Inc. (“Amex”) consenting to such increase in the DIP Credit Facility in return for repayment of $50 million of the $350 million principal amount outstanding under the Amex Post-Petition Facility (defined below).

     As amended, the DIP Credit Facility consists of a $600 million Term Loan A arranged by GECC (the “TLA”), a $700 million Term Loan B arranged by GECC (the “TLB”) and a $600 million Term Loan C arranged jointly by GECC and Morgan Stanley (the “TLC”), together with the TLA and TLB, collectively, the “DIP Loans”). Interim orders issued by the Bankruptcy Court authorized us on an interim basis to borrow up to $1.4 billion of the DIP Loans. Final orders issued by the Bankruptcy Court authorized us to borrow the remaining approximately $500 million under the DIP Credit Facility as amended. We applied a portion of these proceeds to (1) repay in full the $480 million principal amount outstanding under our pre-petition facility for which GECC was agent (the “GE Pre-Petition Facility”); (2) repay in full the $500 million principal amount outstanding under our Amex Pre-Petition Facilities (defined below) and (3) prepay $50 million of the $350 million principal amount outstanding under our Amex Post-Petition Facility. The remainder of the proceeds of the DIP Loans will be used for our general corporate purposes.

     Availability of funds under the TLA is subject to a borrowing base calculation. If the outstanding amount of the TLA at any time exceeds the borrowing base, we must immediately repay the TLA or post cash collateral in an amount equal to the excess. For information concerning the borrowing base calculation, see the DIP Credit Facility, as amended, included as Exhibits 10.1 and 10.2 to this Form 10-Q. The TLA, TLB and TLC each mature on March 16, 2008. As amended, the TLA bears interest, at our option, at LIBOR plus 4.5% or an index rate plus 3.75%, and the TLB bears interest, at our option, at LIBOR plus 6.50% or an index rate plus 5.75%. The TLC bears interest, at our option, at LIBOR plus 9.00% or an index rate plus 8.25%. We may also request the issuance of up to $200 million in letters of credit under the DIP Credit Facility, which amount must be fully cash collateralized at all times such letters of credit are outstanding.

     Our obligations under the DIP Credit Facility are guaranteed by substantially all of our domestic subsidiaries (the “Guarantors”). We will be required to make certain mandatory repayments of the DIP Loans in the event we sell certain assets, subject to certain exceptions. Any portion of the DIP Loans that are repaid through either voluntary or mandatory prepayment may not be reborrowed.

     The DIP Loans and the related guarantees are secured by first priority liens on substantially all of our and the Guarantors’ present and future assets (including assets that previously secured the GE Pre-Petition Facility) and by junior liens on certain of our and our Guarantors’ other assets (including certain accounts receivable and other assets subject to a first priority lien securing the Amex Post-Petition Facility described below), in each case subject to certain exceptions, including an exception for assets which are subject to financing agreements that are entitled to the benefits of Section 1110 of the Bankruptcy Code, to the extent such financing agreements prohibit such liens.

     The DIP Credit Facility includes affirmative, negative and financial covenants that impose substantial restrictions on our financial and business operations, including our ability to, among other things, incur or secure other debt, make investments, sell assets and pay dividends or repurchase stock.

     The financial covenants require us to:

• maintain unrestricted funds in an amount not less than $750 million through May 31, 2006; $1 billion at all times from June 1, 2006 through November 30, 2006; $750 million at all times from December 1, 2006 through February 28, 2007; and $1 billion at all times thereafter (the “Liquidity Covenant ”);

• not exceed specified levels of capital expenditures during any fiscal quarter; and

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• achieve specified levels of EBITDAR, as defined, for successive trailing 12-month periods through March 2008. During 2005, we are required to achieve increasing levels of EBITDAR, including EBITDAR of $644 million for the 12-month period ending December 31, 2005. Thereafter, the minimum EBITDAR level for each successive trailing 12-month period continues to increase, including $1.372 billion for the 12-month period ended December 31, 2006; $1.988 billion for the 12-month period ending December 31, 2007; and $2 billion for each 12-month period ending thereafter. If our cash on hand exceeds the minimum cash on hand that we are required to maintain pursuant to the Liquidity Covenant, then the EBITDAR level that we are required to achieve is effectively reduced by the amount of such excess cash, up to a maximum reduction of $250 million from the required EBITDAR level.

     The DIP Credit Facility contains events of default customary for debtor-in-possession financings, including cross defaults to the Amex Post-Petition Facility and certain change of control events. It is also an event of default if all or substantially all of our flight and other operations are suspended for longer than two days, other than in connection with a general suspension of all U.S. flights, or if certain routes and, subject to certain materiality thresholds, other routes, and slots and gates are revoked, terminated or cancelled. Upon the occurrence of an event of default, the outstanding obligations under the DIP Credit Facility may be accelerated and become due and payable immediately.

Financing Agreement with Amex

     On September 16, 2005, we entered into an agreement (the “Modification Agreement”) with Amex and American Express Bank, F.S.B. pursuant to which we modified certain existing agreements with Amex, including two agreements (the “Amex Pre-Petition Facilities”) under which we had borrowed $500 million from Amex. The Amex Pre-Petition Facilities consist of substantially identical supplements to the two existing agreements under which Amex purchases SkyMiles from us, the Membership Rewards Agreement and the Co-Branded Credit Card Program Agreement (collectively, the “SkyMiles Agreements”).

     As required by the Modification Agreement, on September 16, 2005, we used a portion of the proceeds of our initial borrowing under the DIP Credit Facility to repay the outstanding principal amount of $500 million, together with interest thereon, that we had previously borrowed from Amex under the Amex Pre-Petition Facilities. Simultaneously, pursuant to interim orders issued by the Bankruptcy Court, we borrowed $350 million from Amex pursuant to the terms of the Amex Pre-Petition Facilities as modified by the Modification Agreement (the “Amex Post-Petition Facility”). The amount borrowed under the Amex Post-Petition Facility will be credited, in equal monthly installments, towards Amex’s actual purchases of SkyMiles during the 17-month period commencing in July 2006. Any unused prepayment credit will carry over to the next succeeding month with a final repayment date for any then outstanding advances no later than November 30, 2007. The outstanding advances will bear a fee, equivalent to interest, at a rate of LIBOR plus a margin of 10.25%.

     On October 7, 2005, pursuant to Amendment No. 1 to the Modification Agreement, Amex consented to the above-described increased principal amount of the DIP Credit Facility in return for a prepayment of $50 million under the Amex Post-Petition Facility. The prepayment will be credited in inverse order of monthly installments during the 17-month period commencing in July 2006.

     Our obligations under the Amex Post-Petition Facility are guaranteed by the Guarantors of the DIP Credit Facility. Our obligations under certain of our agreements with Amex, including our obligations under the Amex Post-Petition Facility, the SkyMiles Agreements and the agreement pursuant to which Amex processes travel and other purchases made from us using Amex credit cards (“Card Services Agreement”), and the corresponding obligations of the Guarantors, are secured by (1) a first priority lien on our right to payment from Amex for purchased SkyMiles, our interest in the SkyMiles Agreements and related assets and our right to payment from Amex under and our interest in the Card Services Agreement and (2) a junior lien on the collateral securing the DIP Credit Facility.

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     With certain exceptions, the Amex Post-Petition Facility contains affirmative, negative and financial covenants substantially the same as in the DIP Credit Facility. The Amex Post-Petition Facility contains customary events of default, including cross defaults to our obligations under the DIP Credit Facility and to defaults under certain other of our agreements with Amex. Upon the occurrence of an event of default under the Amex Post-Petition Facility, the loan under the Amex Post-Petition Facility may be accelerated and become due and payable immediately.

     The DIP Credit Facility and the Amex Post-Petition Facility are subject to an intercreditor agreement that generally regulates the respective rights and priorities of the lenders under each Facility with respect to collateral and certain other matters.

Sale of ASA

     On September 7, 2005, we completed the sale of Atlantic Southeast Airlines, Inc. (“ASA”), our wholly owned subsidiary, to SkyWest, Inc. (“SkyWest”) for a purchase price of $425 million. In conjunction with the sale of ASA, we amended our contract carrier agreements with ASA and SkyWest Airlines, Inc. (“SkyWest Airlines”), a wholly owned subsidiary of SkyWest, under which they will continue to serve as Delta Connection carriers. The expiration date of these contract carrier agreements has been extended to 2020. For additional information on our contract carrier agreements with ASA and SkyWest, see Note 5 of the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q.

     Under the terms of the Stock Purchase Agreement, SkyWest purchased 100% of the outstanding capital stock of ASA. We received $350 million at closing, representing $330 million of purchase price and $20 million related to aircraft deposits, without giving effect to the payment of closing costs. As the result of our assumption of our contract carrier agreements with ASA and SkyWest Airlines in our Chapter 11 proceedings, on November 2, 2005 we received an additional $120 million, consisting of $90 million of deferred purchase price and $30 million in certain aircraft deposits. Because the purchase price is also subject to a working capital adjustment, as defined in the Stock Purchase Agreement, we may receive up to the full remaining $5 million of deferred purchase price in the first quarter of 2006, depending on resolution of the working capital adjustment. Pursuant to the GE Pre-Petition Facility, we were required to repay $100 million of the outstanding borrowings under that facility upon closing of this transaction. The remaining proceeds are being used for general corporate purposes. See Note 4 to the Condensed Consolidated Financial Statements in this Form 10-Q for a description of the assets sold and liabilities assumed by SkyWest.

Credit Card Processing Agreement

     In September 2005, we entered into an amendment to the agreement with our existing Visa/MasterCard credit card processor to extend the term of the agreement through October 2007. The credit card processor will maintain a cash reserve from our receivables 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 expected to range between $450 million and $850 million. After the first year of the extension, we may terminate the agreement upon 90 days’ notice and payment of a fee.

     The amendment to the processing agreement allows us to substitute a standby letter of credit for a portion of the cash reserve equal to the lesser of $300 million and 45% of the unflown ticket liability. We have been authorized by the Bankruptcy Court to enter into an engagement letter with an investment bank that has agreed to provide a letter of credit for this purpose if its syndication efforts are successful and we receive the approval of the Creditors’ Committee. We are also in discussions with a provider of an insurance product to support an alternative letter of credit. There can be no assurance that such alternative letter of credit or any other means of offsetting the cash holdback acceptable to the credit card processor will be obtained and, if necessary, approved by the Bankruptcy Court.

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Sources and Uses of Cash

     Cash and cash equivalents and short-term investments totaled $1.4 billion at September 30, 2005 and $1.8 billion at December 31, 2004. Restricted cash totaled $1.2 billion at September 30, 2005 and $350 million at December 31, 2004.

Cash provided by operating activities

     For the nine months ended September 30, 2005, cash provided by operating activities totaled $163 million, which includes the following significant items:

• Our $2.6 billion net loss for the nine months ended September 30, 2005, which includes $956 million of depreciation and amortization expense, $712 million of pension related items, asset writedowns, restructuring and related items, and $607 million of net charges related to reorganization items.

• A $383 million increase in our air traffic liability at September 30, 2005 compared to December 31, 2004, due to higher bookings.

• Approximately $390 million in funding for our defined benefit and defined contribution pension plans.

• The sale of short term investments in the amount of approximately $335 million.

Cash used in investing activities

     For the nine months ended September 30, 2005, cash used in investing activities totaled $819 million, which includes the following significant items:

• Our restricted cash balance increased approximately $890 million. This increase primarily relates to cash holdbacks associated with our credit card processing agreements and certain other interline clearinghouses as a result of our Chapter 11 filing.

• Cash used for flight equipment additions, including advanced deposits, totaling $535 million. This includes $417 million we paid to purchase 11 B-737-800 aircraft that we sold to a third party immediately after those aircraft were delivered to us by the manufacturer for a like amount.

• Cash used for ground property and equipment totaling $196 million. This includes expenditures totaling $58 million related to our Boston Airport Terminal project, which was offset by $73 million in reimbursements from restricted investments related to this project.

• Cash proceeds from the sale of ASA, net of cash that remained with ASA, was $297 million. For additional information, see Note 4 of the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q.

Cash provided by (used) in financing activities

     For the nine months ended September 30, 2005, cash provided by financing activities totaled $554 million and includes the following significant items:

• During the March 2005 quarter we received the final installment of $250 million under our Amex Pre-Petition Facilities. The Amex Pre-Petition Facilities were repaid in connection with our post-petition financing.

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• During the September 2005 quarter, in conjunction with the sale of ASA (see “Significant Liquidity Events – Sale of ASA” and Note 4 in the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q) we were required to repay $100 million pursuant to the GE Pre-Petition Facility.

• During the September 2005 quarter and in conjunction with our Chapter 11 filing, we obtained post-petition financing including net proceeds of approximately $730 million. For additional information regarding our post-petition financing see Note 3 in the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q.

Pension Plans

     We sponsor defined contribution and defined benefit pension plans for eligible employees and retirees. Our funding obligations for certain of these plans are governed by the Employee Retirement Income Security Act of 1974 (“ERISA”). Estimates of pension plan funding requirements can vary materially from actual funding requirements because the estimates are based on various assumptions, including those described below.

     Defined Contribution Pension Plans (“DC Plans”) - During the nine months ended September 30, 2005, we contributed approximately $65 million to our DC Plans. During the December 2005 quarter, we expect to contribute an additional $35 million to these plans. Estimates of future funding requirements under the DC Plans are based on various assumptions. These assumptions include, among other things, the number of participants in the DC Plans; the salary levels of those participants; and the outcome of efforts to modify our collective bargaining agreement with ALPA, either on a consensual basis or under the Chapter 11 process.

     Defined Benefit Pension Plans (“DB Plans”) - During the nine months ended September 30, 2005, we contributed approximately $325 million to our DB Plans. Estimates of future funding requirements under the DB Plans are based on various assumptions. These assumptions include, among other things, the actual and projected market performance of assets of the DB Plans; future long-term corporate bond yields; statutory requirements; the terms of the DB Plans; and demographic data for participants in the DB Plans, including the number of participants, their salaries and the rate of participant attrition.

     Assuming current funding rules, we estimate that the funding requirements under our DB Plans for 2006, 2007 and 2008 will aggregate approximately $3.4 billion. Substantially all of this amount relates to benefits earned prior to the Petition Date. We believe we are not required to fund such pre-petition amounts while operating under Chapter 11 of the Bankruptcy Code.

     We currently cannot predict whether our DB Plans will continue upon emergence from Chapter 11. If they do continue, we may be required to fully fund required contributions at that date, including contributions related to benefits earned prior to our Petition Date.

     For additional information about our pension plans, see Note 10 of the Notes to the Consolidated Financial Statements in our Form 10-K and Note 6 of the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q.

Risk Factors Relating to Delta

 We filed for reorganization under Chapter 11 of the Bankruptcy Code on September 14, 2005 and are subject to the risks and uncertainties associated with Chapter 11 proceedings.

     For the duration of our Chapter 11 proceedings, our operations, including our ability to execute our expanded transformation plan, are subject to the risks and uncertainties associated with bankruptcy. Risks and uncertainties associated with our Chapter 11 proceedings include the following:

• the actions and decisions of our creditors and other third parties with interests in our Chapter 11 proceedings, which may be inconsistent with our plans;

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• our ability to obtain court approval with respect to motions in the Chapter 11 proceedings prosecuted from time to time;

• our ability to develop, prosecute, confirm and consummate a plan of reorganization with respect to the Chapter 11 proceedings;

• risks associated with third parties seeking and obtaining court approval to terminate or shorten the exclusivity period for us to propose and confirm a plan of reorganization, to appoint a Chapter 11 trustee or to convert the cases to Chapter 7 cases;

• our ability to obtain and maintain normal terms with vendors and service providers; and

• our ability to maintain contracts that are critical to our operations.

     These risks and uncertainties could affect our business and operations in various ways. For example, negative events or publicity associated with our Chapter 11 proceedings could adversely affect our relationship with customers, vendors and employees, which in turn could adversely affect our operations and financial condition, particularly if the Chapter 11 proceedings are protracted. Also, transactions outside the ordinary course of business are subject to the prior approval of the Bankruptcy Court, which may limit our ability to respond timely to certain events or take advantage of certain opportunities.

     In addition, our plans with respect to our fleet may be impacted by the actions of aircraft financing parties. Actions that we desire to take, such as rejection of aircraft, may be resisted by affected parties, which may delay our ability to implement our plans timely. Furthermore, the 60-day period under Section 1110 in our Chapter 11 proceedings will expire on November 14, 2005. We have reached agreements with certain aircraft financing parties to extend the automatic stay and to make certain changes to the terms of the applicable financing structure. We will also make elections with respect to certain other aircraft to cure all existing defaults and to pay the contract rates as required by the Bankruptcy Code. With respect to certain aircraft, however, we have neither elected to cure and resume payments nor negotiated an extension of the automatic stay. Accordingly, the financing parties for such aircraft may seek to repossess the property. Even though we are in negotiations with some aircraft financing parties with respect to the disposition or use of aircraft for which we have not elected to cure and resume payments or negotiated an extension of the automatic stay on satisfactory terms for such disposition or use, the financing parties for these aircraft may still seek to repossess the property. Any such repossession could disrupt our operations and could have a material adverse effect on our business.

     Because of the risks and uncertainties associated with our Chapter 11 proceedings, the ultimate impact that events that occur during these proceedings will have on our business, financial condition and results of operations cannot be accurately predicted or quantified.

We have substantial liquidity needs and face significant liquidity pressure.

     At September 30, 2005, our cash and cash equivalents were $1.4 billion. This amount reflects the net proceeds of our initial borrowings under the DIP Credit Facility and the Amex Post-Petition Facility (collectively the “Post-Petition Financing Agreements”) agreements on September 16, 2005. We subsequently borrowed an additional $450 million following the Bankruptcy Court’s entry of final orders with respect to the Post-Petition Financing Agreements in October 2005.

     We continue to have substantial liquidity needs in the operation of our business and face significant challenges due to historically high aircraft fuel prices, low passenger mile yields and other cost pressures.

     Accordingly, we believe that our cash and cash equivalents and short-term investments will be under extreme pressure during the remainder of 2005 and early 2006. Because substantially all of our assets are encumbered, our credit ratings are low, and our Post-Petition Financing Agreements contain restrictions against additional borrowing, we believe we will not be able to obtain any material amount of additional debt financing during our Chapter 11 proceedings.

Our Post-Petition Financing Agreements include financial and other covenants that impose substantial restrictions on our financial and business operations.

     The Post-Petition Financing Agreements include financial covenants that, among other things, require us to (1) maintain unrestricted funds in an amount not less than $750 million through May 31, 2006; $1

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billion at all times from June 1, 2006 through November 30, 2006; $750 million at all times from December 1, 2006 through February 28, 2007; and $1 billion at all times thereafter (the “Liquidity Covenant”) and (2) achieve certain levels of EBITDAR (earnings before interest, taxes, depreciation, amortization and aircraft rent, as defined). For additional information about our financial covenants, see Note 3 of the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q.

     Our ability to comply with the EBITDAR covenant depends on our ability to achieve the targeted benefits of our expanded transformation plan in certain timeframes. If we are unable to achieve the targeted benefits that are contemplated in our expanded transformation plan, we may not be able to comply with our EBITDAR covenant.

     In addition, our Post-Petition Financing Agreements also restrict our ability to, among other things, incur or secure additional indebtedness, make investments, sell assets and pay dividends or repurchase stock. The Post-Petition Financing Agreements contain events of default customary for debtor-in-possession financings of this type, including cross defaults to each other and certain change of control events. If we fail to comply with the covenants in the Post-Petition Financing Agreements and are unable to obtain a waiver or amendment, the lenders could declare outstanding borrowings under these agreements immediately due and payable.

We have experienced significant losses in recent years, which have had a material adverse effect on our financial condition. The implementation of our expanded transformation plan requires that we make significant changes to our business.

     We recorded an unaudited consolidated net loss of $2.6 billion for the nine months ended September 30, 2005. During the four years ended December 31, 2004, we reported an aggregate consolidated net loss of approximately $8.5 billion. As reflected by our Chapter 11 filing, these losses are not sustainable.

     During the last several years, we implemented profit improvement initiatives, which became the basis for our transformation plan announced in late 2004 to address the conditions that led to these losses. Our transformation plan has a goal of providing us with approximately $5 billion in annual benefits by the end of 2006 (as compared to 2002), primarily through cost reductions. We are on track to obtain the full $5 billion in benefits by the end of 2006. As of September 30, 2005, we had implemented initiatives intended to achieve approximately 90% of these benefits.

     The benefits we are realizing under our initial transformation plan are, however, being outpaced and masked by historically high aircraft fuel prices. We continue to operate in a weak pricing environment, which limits our ability to increase fares to offset these high fuel costs. Accordingly, we must make additional substantial changes in our business to further reduce our cost structure and increase our revenues in order to maintain adequate liquidity and achieve long-term viability. In the context of our Chapter 11 proceedings, we are expanding our transformation plan to target the delivery of an additional $3 billion in annual benefits by the end of 2007.

     We cannot assure you that the anticipated benefits of our expanded transformation plan will be achieved or that if they are achieved that they will be adequate for us to maintain financial viability. In addition, our expanded transformation plan involves significant change to our business. We cannot assure you that we will be successful in implementing the plan or that key elements, such as employee job reductions, will not have an adverse impact on our business and results of operations, particularly in the near term.

Our business is dependent on the price and availability of aircraft fuel. Continued periods of historically high fuel costs will continue to materially adversely affect our operating results. Likewise, significant disruptions in the supply of aircraft fuel would materially adversely affect our operations and operating results.

     Our operating results are significantly impacted by changes in the price and availability of aircraft fuel. Fuel prices increased substantially in 2004 and the first nine months of 2005. In 2004, our average fuel price per gallon rose 42% to approximately $1.16 as compared to an average price of 81.78¢ in 2003. Our fuel costs represented 16%, 13% and 11% of our operating expenses in 2004, 2003 and 2002, respectively. During the nine months ended September 30, 2005, aircraft fuel prices continued to increase and remained

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at historically high levels. Our average fuel price per gallon for the nine months ended September 30, 2005, was $1.62, a 51% increase compared to the nine months ended September 30, 2004. Our fuel costs represented 23% and 16% of our operating expenses during the nine months ended September 30, 2005, and 2004, respectively.

     During the months of September and October, 2005, our fuel costs and supplies were negatively impacted by the two hurricanes, Katrina and Rita, that struck the Gulf Coast region of the United States. These storms interfered with the operations of production facilities and refineries located in Louisiana and Texas. As a result, our fuel costs have significantly increased further, primarily from drastically increased costs of refining crude oil into jet fuel.

     Due to the competitive nature of the airline industry, we generally have not been able to increase our fares substantially when fuel prices have risen in the past and we may not be able to do so in the future. Even if we are able to increase our fares when fuel prices rise, we do not expect these increases to cover the increase in our fuel costs.

     Our aircraft fuel purchase contracts do not provide material protection against price increases or assure the availability of our fuel supplies. We purchase most of our aircraft fuel from petroleum refiners under contracts that establish the price based on various market indices. We also purchase aircraft fuel on the spot market, from offshore sources and under contracts that permit the refiners to set the price. None of our aircraft fuel requirements are currently hedged.

     Although we are currently able to obtain adequate supplies of aircraft fuel, it is impossible to predict the future availability or price of aircraft fuel. Political disruptions or wars involving oil-producing countries, changes in governmental policy concerning aircraft fuel production, transportation or marketing, changes in aircraft fuel production capacity, environmental concerns, natural disasters and other unpredictable events may result in additional fuel supply shortages and fuel price increases in the future.

Employee strikes and other labor-related disruptions may adversely affect our operations.

     Our business is labor intensive, utilizing large numbers of pilots, flight attendants and other personnel. Approximately 17% of our workforce is unionized. Strikes or labor disputes with our and our affiliates’ unionized employees may adversely affect our ability to conduct our business. Relations between air carriers and labor unions in the United States are governed by the Railway Labor Act (“RLA”), which provides that a collective bargaining agreement between an airline and a labor union does not expire, but instead becomes amendable as of a stated date. Our collective bargaining agreement with ALPA becomes amendable on December 31, 2009. The RLA generally prohibits strikes or other types of self-help actions both before and after a collective bargaining agreement becomes amendable, unless and until the collective bargaining processes required by the RLA have been exhausted.

     One of the components of our expanded transformation plan requires that we achieve $325 million in annual pilot labor cost reductions. Because to date we have been unable to negotiate a consensual agreement to achieve such cost reductions with ALPA, we filed a motion under Section 1113(c) of the Bankruptcy Code to reject our collective bargaining agreement with ALPA. We intend to continue to negotiate with ALPA to seek a consensual agreement in order to achieve these cost reductions. If we are unable to reach an agreement with ALPA, the Bankruptcy Court will determine if we can reject the collective bargaining agreement. If the Bankruptcy Court permits us to reject the collective bargaining agreement, ALPA may seek to initiate a strike or other forms of work disruptions, which we believe would not be permitted under the RLA. However, we cannot predict the outcome of any effort to obtain court relief to prevent or stop a strike or other forms of work disruptions. In addition, if we or our affiliates are unable to reach agreement with any of our unionized work groups on future negotiations regarding the terms of their collective bargaining agreements, or if additional segments of our workforce become unionized, we may be subject to work interruptions or stoppages, subject to the requirements of the RLA and the Bankruptcy Code.

Our defined benefit pension plan funding requirements are significant, are affected by factors beyond our control and could have a material adverse impact on our liquidity.

     Our funding obligations for certain of our DB plans are governed by ERISA.

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During the nine months ended September 30, 2005, we contributed approximately $325 million to our DB Plans. Estimates of future funding requirements under the DB Plans are based on various assumptions. These assumptions include, among other things, the actual and projected market performance of assets of the DB Plans; future long-term corporate bond yields; statutory requirements; the terms of the DB Plans; and demographic data for participants in the DB Plans, including the number of participants, their salaries and the rate of participant attrition.

     Assuming current funding rules, we estimate that the funding requirements under our DB Plans for 2006, 2007 and 2008 will aggregate approximately $3.4 billion. Substantially all of this amount relates to benefits earned prior to the Petition Date. We believe we are not required to fund such pre-petition amounts while operating under Chapter 11.

     We currently cannot predict whether our DB Plans will continue upon emergence from Chapter 11. If they do continue, we may be required to fully fund required contributions at that date, including contributions related to benefits earned prior to our Petition Date.

     For additional information about our pension plans, see Note 10 of the Notes to the Consolidated Financial Statements in our Form 10-K and Note 6 of the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q.

Our credit ratings have been substantially lowered and we believe we will not be able to obtain any material amount of additional debt financing.

     In recent years, we have relied heavily on our ability to access the capital markets to finance our business and operations. Since September 11, 2001, our senior unsecured long-term debt ratings have been lowered to C by Moody’s Investors Service, Inc., D by Standard & Poor’s Rating Services and C by Fitch Ratings. Moody’s has stated that their ratings outlook for our senior unsecured debt is negative. Our credit ratings may be lowered further or withdrawn. Because of our credit ratings and other factors, we believe we will not be able to obtain any material amount of additional debt financing during our Chapter 11 proceedings.

Interruptions or disruptions in service at one of our hub airports could have a material adverse impact on our operations.

     Our business is heavily dependent on our operations at the Hartsfield-Jackson Atlanta International Airport (“Atlanta Airport”) and at our other hub airports in Cincinnati and Salt Lake City. Each of these hub operations includes flights that gather and distribute traffic from markets in the geographic region surrounding the hub to other major cities and to other Delta hubs. A significant interruption or disruption in service at the Atlanta Airport or at one of our other hubs could have a serious impact on our business, financial condition and results of operations.

We are increasingly dependent on technology in our operations, and if our technology fails or we are unable to continue to invest in new technology, our business may be adversely affected.

     We have become increasingly dependent on technology initiatives to reduce costs and to enhance customer service in order to compete in the current business environment. For example, we have made significant investments in check-in kiosks, Delta Direct phone banks and related initiatives across the

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system. The performance and reliability of our technology are critical to our ability to attract and retain customers and our ability to compete effectively. In this challenging business environment, particularly during our Chapter 11 proceedings, we may not be able to continue to make sufficient capital investments in our technology infrastructure to deliver these expected benefits.

     In addition, any internal technology error or failure, or large scale external interruption in technology infrastructure we depend on, such as power, telecommunications or the internet, may disrupt our technology network. Any individual, sustained or repeated failure of our technology could impact our customer service and result in increased costs. Like all companies, our technology systems may be vulnerable to a variety of sources of interruption due to events beyond our control, including natural disasters, terrorist attacks, telecommunications failures, computer viruses, hackers and other security issues. While we have in place, and continue to invest in, technology security initiatives and disaster recovery plans, these measures may not be adequate or implemented properly to prevent a business disruption and its adverse financial consequences to our business.

If we experience further losses of our senior management and other key employees, our operating results could be adversely affected, and we may not be able to attract and retain additional qualified management personnel.

     We are dependent on the experience and industry knowledge of our officers and other key employees to execute our business plans. Our deteriorating financial performance, along with our Chapter 11 proceedings, creates uncertainty that has led to unwanted attrition. We are at risk of losing management talent critical to the successful transformation and ongoing operation of our business. If we were to continue to experience a substantial turnover in our leadership and other key employees, our performance could be materially adversely impacted. Furthermore, we may be unable to attract and retain additional qualified executives as needed in the future.

We are facing significant litigation, including litigation arising from the terrorist attacks on September 11, 2001, and if any such significant litigation is concluded in a manner adverse to us, our financial condition and operating results could be materially adversely affected.

     We are involved in legal proceedings relating to antitrust matters, employment practices, environmental issues and other matters concerning our business. We are also a defendant in numerous lawsuits arising out of the terrorist attacks of September 11, 2001. It appears that the plaintiffs in these September 11 actions are alleging that we and many other air carriers are jointly liable for damages resulting from the terrorist attacks based on a theory of shared responsibility for passenger security screening at Boston-Logan International Airport, Washington Dulles International Airport and Newark Liberty International Airport. These lawsuits, which are in preliminary stages, generally seek unspecified damages, including punitive damages. Although federal law limits the financial liability of any air carrier for compensatory and punitive damages arising out of the September 11 terrorist attacks to no more than the limits of liability insurance coverage maintained by the air carrier, it is possible that we may be required to pay damages in the event of our insurer’s insolvency or otherwise.

     As a result of our Chapter 11 filing, most attempts to collect, secure or enforce remedies with respect to pre-petition claims against us are subject to the automatic stay provisions of Section 362(a) of the Bankruptcy Code and certain liabilities could be discharged in the Chapter 11 proceedings. While we cannot reasonably estimate the potential loss for certain of our legal proceedings because, for example, the litigation is in its early stages or the plaintiff does not specify damages being sought, if the outcome of any significant litigation is adverse to us and such proceedings are not discharged in our Chapter 11 proceedings, our financial condition and operating results could be materially adversely impacted.

We are at risk of losses and adverse publicity stemming from any accident involving our aircraft.

     If one of our aircraft were to crash or be involved in an accident, we could be exposed to significant tort liability. The insurance we carry to cover damages arising from any future accidents may be inadequate. In the event that our insurance is not adequate, we may be forced to bear substantial losses from an accident. In addition, any accident involving an aircraft that we operate or is operated by an airline that is one of our codeshare partners could create a public perception that our aircraft are not safe or reliable, which could harm our reputation, result in air travelers being reluctant to fly on our aircraft and harm our business.

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Issuances of equity in connection with our restructuring increase the likelihood that in the future our ability to utilize our federal income tax net operating loss carryforwards may be limited.

     Under federal income tax law, a corporation is generally permitted to deduct from taxable income in any year net operating losses carried forward from prior years. We have net operating loss carryforwards of approximately $8.4 billion as of September 30, 2005. Our ability to deduct net operating loss carryforwards could be subject to a significant limitation if we were to undergo an “ownership change” for purposes of Section 382 of the Internal Revenue Code of 1986, as amended (an “Ownership Change”) during or as a result of our Chapter 11 proceedings.

Risk Factors Relating to the Airline Industry

Bankruptcies and other restructuring efforts by our competitors put us at a competitive disadvantage.

     Prior to our filing for reorganization under Chapter 11 of the Bankruptcy Code, several other air carriers, including United Airlines, the second largest U.S. air carrier, and US Airways, the seventh largest U.S. air carrier, utilized this process to reduce their operating costs by reducing labor costs, including through renegotiating collective bargaining agreements, terminating pension plans, and restructuring lease and debt obligations. Additionally, American Airlines restructured certain labor costs and lowered its operating cost base. These reorganizations and restructurings enabled these competitors to significantly lower their operating costs in the last few years. These actions placed us at a serious competitive disadvantage because our unit costs went from being among the lowest of the hub-and-spoke carriers in 2002 to among the highest in 2004. While we believe that the benefits from our expanded transformation plan, will contribute to a significant reduction of our unit costs, our cost structure will still be higher than that of low-cost carriers.

The airline industry has changed fundamentally since the terrorist attacks on September 11, 2001, and our business, financial condition and operating results have been materially adversely affected.

     Since the terrorist attacks of September 11, 2001, the airline industry has experienced fundamental and permanent changes, including substantial revenue declines and cost increases, which have resulted in industry-wide liquidity issues. The terrorist attacks significantly reduced the demand for air travel, and additional terrorist activity involving the airline industry could have an equal or greater impact. Although global economic conditions have improved from their depressed levels after September 11, 2001, the airline industry has continued to experience a reduction in high-yield business travel and increased price sensitivity in customers’ purchasing behavior. In addition, aircraft fuel prices have increased significantly during the last several years and have been at historically high levels for an extended period during 2005. The airline industry has continued to add or restore capacity despite these conditions. We expect all of these conditions will persist and will continue to adversely impact our operations and profitability.

The airline industry is highly competitive, and if we cannot successfully compete in the marketplace, our business, financial condition and operating results will be materially adversely affected.

     We face significant competition with respect to routes, services and fares. Our domestic routes are subject to competition from both new and established carriers, some of which have substantially lower costs than we do and provide service at low fares to destinations served by us. Our revenues continue to be materially adversely impacted by the growth of low-cost carriers, with which we compete in most of our markets. Significant expansion by low-cost carriers to our hub airports could have an adverse impact on our business. We also face increasing competition in smaller to medium-sized markets from rapidly expanding regional jet operators. In addition, we compete with foreign carriers, both on interior U.S. routes, due to marketing and codesharing arrangements, and in international markets.

The airline industry is subject to extensive government regulation, and new regulations may increase our operating costs.

     Airlines are subject to extensive regulatory and legal compliance requirements that result in significant costs. For instance, the Federal Aviation Administration (“FAA”) from time to time issues directives and other regulations relating to the maintenance and operation of aircraft that necessitate significant expenditures. We expect to continue incurring expenses to comply with the FAA’s regulations.

47

     Other laws, regulations, taxes and airport rates and charges have also been imposed from time to time that significantly increase the cost of airline operations or reduce revenues. For example, the Aviation and Transportation Security Act, which became law in November 2001, mandates the federalization of certain airport security procedures and imposes additional security requirements on airports and airlines, most of which are funded by a per ticket tax on passengers and a tax on airlines. The federal government has recently proposed a significant increase in the per ticket tax. Due to the weak revenue environment, the existing tax has negatively impacted our revenues because we have not been able to increase our fares to pass these fees on to our customers. Similarly, the proposed ticket tax increase, if implemented, could negatively impact our revenues.

     Furthermore, we and other U.S. carriers are subject to domestic and foreign laws regarding privacy of passenger and employee data that are not consistent in all countries in which we operate. In addition to the heightened level of concern regarding privacy of passenger data in the United States, certain European government agencies are initiating inquiries into airline privacy practices. Compliance with these regulatory regimes is expected to result in additional operating costs and could impact our operations and any future expansion.

Our insurance costs have increased substantially as a result of the September 11 terrorist attacks, and further increases in insurance costs or reductions in coverage could have a material adverse impact on our business and operating results.

     As a result of the terrorist attacks on September 11, 2001, aviation insurers significantly reduced the maximum amount of insurance coverage available to commercial air carriers for liability to persons (other than employees or passengers) for claims resulting from acts of terrorism, war or similar events. At the same time, aviation insurers significantly increased the premiums for such coverage and for aviation insurance in general. Since September 24, 2001, the U.S. government has been providing U.S. airlines with war-risk insurance to cover losses, including those resulting from terrorism, to passengers, third parties (ground damage) and the aircraft hull. The coverage currently extends through December 31, 2005. The withdrawal of government support of airline war-risk insurance would require us to obtain war-risk insurance coverage commercially, if available. Such commercial insurance could have substantially less desirable coverage than currently provided by the U.S. government, may not be adequate to protect our risk of loss from future acts of terrorism, may result in a material increase to our operating expenses and may not be obtainable at all, resulting in an interruption to our operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     There have been no material changes in market risk from the information provided in the “Market Risks Associated with Financial Instruments” section of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K other than those discussed below.

Aircraft Fuel Price Risk

     Our results of operations may be significantly impacted by changes in the price of aircraft fuel. In the past, to manage this risk, we periodically entered into heating and crude oil derivative contracts to hedge a portion of our projected annual aircraft fuel requirements. Heating and crude oil prices have a highly correlated relationship to fuel prices, making these derivatives effective in offsetting changes in the cost of aircraft fuel. We do not enter into fuel hedge contracts for speculative purposes.

     For the nine months ended September 30, 2005, aircraft fuel expense accounted for 23% of our total operating expenses. Our aircraft fuel expense rose 55%, or $1.1 billion, for the nine months ended September 2005 compared to the same period a year ago, with approximately $1.0 billion of the increase resulting from higher fuel prices. The average fuel price per gallon increased 51% to $1.62 and total gallons consumed increased 2%. Fuel prices continue to be at historically high levels.

     We project that our aircraft fuel consumption will be approximately 558 million gallons for the three months ending December 31, 2005. Based on our assumed average jet fuel price per gallon of $2.14 for that period, a 10% rise in that jet fuel price would increase our aircraft fuel expense by approximately $119 million for the three months ending December 31, 2005. We have no hedges or contractual arrangements in place that

48

would reduce our jet fuel costs below market prices, and the forward curve for crude oil currently implies that aircraft fuel prices will remain at historically high levels beyond the near term.

     For additional information regarding our other exposures to market risks, see “Market Risks Associated with Financial Instruments” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as Notes 2, 3 and 4 of the Notes to the Consolidated Financial Statements in our Form 10-K.

Item 4. Controls and Procedures

     (a) Our management, including our Chief Executive Officer and Executive Vice President and Chief Financial Officer, performed an evaluation of our disclosure controls and procedures, which have been designed to permit us to effectively identify and timely disclose important information. Our management, including our Chief Executive Officer and Executive Vice President and Chief Financial Officer, concluded that the controls and procedures were effective as of September 30, 2005 to ensure that material information was accumulated and communicated to our management, including our Chief Executive Officer and Executive Vice President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

     (b) Except as set forth below, during the three months ended September 30, 2005, we made no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

     As discussed above, on September 14, 2005, we and substantially all our subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code. The Chapter 11 proceedings have had a significant impact on our business processes and related internal controls over financial reporting to ensure the proper separation and payment of pre-petition and post-petition obligations, and to prepare consolidated financial statements reflecting the changes brought about as a result of the Chapter 11 proceedings.

49

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareowners of
Delta Air Lines, Inc.
Atlanta, Georgia

We have reviewed the accompanying consolidated balance sheet of Delta Air Lines, Inc. (Debtor and Debtor-in-Possession) and subsidiaries (the “Company”) as of September 30, 2005, and the related consolidated statements of operations for the three-month and nine-month periods ended September 30, 2005 and 2004, and the condensed consolidated statements of cash flows for the nine-month periods ended September 30, 2005 and 2004. These interim financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1, the Company has filed for reorganization under Chapter 11 of the United States Bankruptcy Code. The accompanying financial statements do not purport to reflect or provide for the consequences of the bankruptcy proceedings. In particular, such financial statements do not purport to show (a) as to assets, their realizable value on a liquidation basis or their availability to satisfy liabilities; (b) as to prepetition liabilities, the amounts that may be allowed for claims or contingencies, or the status and priority thereof; (c) as to shareowner accounts, the effect of any changes that may be made in the capitalization of the Company; or (d) as to operations, the effect of any changes that may be made in its business.

The accompanying condensed consolidated interim financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Notes 1 and 2 to the condensed consolidated interim financial statements and Note 1 to the annual financial statements for the year ended December 31, 2004 (not presented herein), certain conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Notes 1 and 2 to the condensed consolidated interim financial statements and Note 1 to the annual financial statements for the year ended December 31, 2004 (not presented herein).

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Company as of December 31, 2004, and the related consolidated statements of operations, cash flows and shareowners’ (deficit) equity for the year then ended (not presented herein); and in our report dated March 9, 2005, we expressed an unqualified opinion on those consolidated financial statements and included an explanatory paragraph concerning matters that raise substantial doubt about the Company’s ability to continue as a going concern. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2004 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Deloitte & Touche LLP

Atlanta, Georgia

November 10, 2005

50

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Chapter 11 Proceedings

     As discussed above, on September 14, 2005, we and certain of our subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). The reorganization cases are being jointly administered under the caption “In re Delta Air Lines, Inc., et al., Case No. 05-17923-PCB.” The debtors continue to operate their business as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. As of the date of the Chapter 11 filing, virtually all pending litigation (including actions described below) is stayed, and absent further order of the Bankruptcy Court, no party, subject to certain exceptions, may take any action, also subject to certain exceptions, to recover on pre-petition claims against the Debtors. At this time it is not possible to predict the outcome of the Chapter 11 filings or their effect on our business.

Multidistrict Pilot Retirement Plan Litigation

     On May 19, 2005, the plaintiffs, Delta and the Delta Pilots Retirement Plan (“Plan”) entered into an agreement to settle this litigation on a class action basis which resolves all claims. Under the terms of the proposed settlement, Delta and the Plan would pay to a settlement fund a total of $16 million, of which Delta believes up to $15.5 million would be paid from the Plan. In addition, upon exhaustion of all rights to challenge the court’s final approval of the settlement, Delta would issue warrants to purchase 1 million shares of Delta common stock to certain members of the plaintiff class. The warrants would be exercisable upon grant and expire five years thereafter. The total number of warrants would be divided into four series, with the first series having an exercise price equal to $2.96 (the average of the last reported sales price of the common stock on the New York Stock Exchange Composite Tape for the five consecutive trading days immediately preceding May 19, 2005, rounded up to the nearest whole cent); and the second, third and fourth series having an exercise price of $5.46, $7.96 and $10.46, respectively. The district court has approved the settlement.

     For additional information about this litigation, see “Item 3. Legal Proceedings – Multidistrict Pilot Retirement Plan Litigation” in our Form 10-K.

Item 3. Defaults Upon Senior Securities

     As the result of our filing of voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code, we are in default on substantially all of our debt obligations other than our post-petition financings. The aggregate amount in default at September 30, 2005, totaled approximately $11.7 billion.

Item 6. Exhibits

(a) Exhibits

10.1 Secured Super-Priority Debtor in Possession Credit Agreement dated as of September 16, 2005 among Delta Air Lines, Inc., a Debtor and Debtor in Possession, as Borrower, the other Credit Parties signatory thereto, each Debtor and Debtor in Possession, as Credit Parties, the Lenders signatory thereto from time to time, as Lenders, and General Electric Capital Corporation, as Administrative Agent and Lender (“Secured Super-Priority Debtor-in-Possession Credit Agreement”).

51

10.2	Amendment No. 1 to Secured Super-Priority Debtor-in-Possession Credit Agreement dated as of October 7, 2005
15	Letter from Deloitte & Touche LLP regarding unaudited interim financial information.
31.1	Certification by Delta’s Chief Executive Officer with Respect to Delta’s Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2005.
31.2	Certification by Delta’s Executive Vice President and Chief Financial Officer with Respect to Delta’s Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2005.
32	Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code by Delta’s Chief Executive Officer and Executive Vice President and Chief Financial Officer with respect to Delta’s Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2005.

52

SIGNATURE

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 thereunto duly authorized.

Delta Air Lines, Inc.
(Registrant)
 

By:  /s/ Edward H. Bastian  

Edward H. Bastian 

Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) 

November 10, 2005

53

Exhibit Index

Exhibit No.	Description
10.1	Secured Super-Priority Debtor in Possession Credit Agreement dated as of September 16, 2005 among Delta Air Lines, Inc., a Debtor and Debtor in Possession, as Borrower, the other Credit Parties signatory thereto, each Debtor and Debtor in Possession, as Credit Parties, the Lenders signatory thereto from time to time, as Lenders, and General Electric Capital Corporation, as Administrative Agent and Lender (“Secured Super-Priority Debtor-in-Possession Credit Agreement”).
10.2	Amendment No. 1 to Secured Super-Priority Debtor-in-Possession Credit Agreement dated as of October 7, 2005.
15	Letter from Deloitte & Touche LLP regarding unaudited interim financial information.
31.1	Certification by Delta’s Chief Executive Officer with Respect to Delta’s Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2005.
31.2	Certification by Delta’s Executive Vice President and Chief Financial Officer with Respect to Delta’s Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2005.
32	Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code by Delta’s Chief Executive Officer and Executive Vice President and Chief Financial Officer with respect to Delta’s Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2005.

54

EX-10.1

                                                                    EXHIBIT 10.1

                                                                  EXECUTION COPY

================================================================================

                                 $1,700,000,000

                   SECURED SUPER-PRIORITY DEBTOR IN POSSESSION
                                CREDIT AGREEMENT

                         DATED AS OF SEPTEMBER 16, 2005

                                      AMONG

                             DELTA AIR LINES, INC.,
                       A DEBTOR AND DEBTOR IN POSSESSION,
                                  AS BORROWER,

                   THE OTHER CREDIT PARTIES SIGNATORY HERETO,
                     EACH A DEBTOR AND DEBTOR IN POSSESSION,
                               AS CREDIT PARTIES,

                 THE LENDERS SIGNATORY HERETO FROM TIME TO TIME,
                                   AS LENDERS,

                                       AND

                      GENERAL ELECTRIC CAPITAL CORPORATION,
                       AS ADMINISTRATIVE AGENT AND LENDER

                                      * * *

                            GE CAPITAL MARKETS, INC.,
                 AS SOLE LEAD ARRANGER AND SOLE BOOK RUNNER FOR
                           TERM LOAN A AND TERM LOAN B

                                      * * *

                            GE CAPITAL MARKETS, INC.
                                       AND
                      MORGAN STANLEY SENIOR FUNDING, INC.,
               AS JOINT LEAD ARRANGERS AND JOINT BOOK RUNNERS FOR
                                   TERM LOAN C

================================================================================



                                TABLE OF CONTENTS



                                                                                           Page
                                                                                           ----
                                                                                        
1.  AMOUNT AND TERMS OF CREDIT..........................................................     2
    1.1     Credit Facilities...........................................................     2
    1.2     Prepayments.................................................................     3
    1.3     Priority and Application of Payments........................................     5
    1.4     Use of Proceeds.............................................................     5
    1.5     Interest and Applicable Margins.............................................     6
    1.6     Term A Borrowing Base.......................................................     8
    1.7     [Reserved.].................................................................     8
    1.8     Fees........................................................................     8
    1.9     Receipt of Payments.........................................................     8
    1.10    Loan Account and Accounting.................................................     8
    1.11    Indemnity...................................................................     9
    1.12    Access......................................................................    10
    1.13    Taxes.......................................................................    11
    1.14    Capital Adequacy; Increased Costs; Illegality...............................    12
    1.15    Regulation D Compensation...................................................    14
2.  CONDITIONS PRECEDENT................................................................    14
    2.1     Conditions to Closing.......................................................    14
    2.2     Conditions to Subsequent Loans..............................................    17
3.  REPRESENTATIONS AND WARRANTIES......................................................    18
    3.1     Corporate Existence; Compliance with Law....................................    18
    3.2     Executive Offices, Collateral Locations, FEIN...............................    18
    3.3     Corporate Power, Authorization, Enforceable Obligations.....................    19
    3.4     Financial Statements and Projections........................................    19
    3.5     Material Adverse Effect; Burdensome Restrictions; Default...................    20
    3.6     Ownership of Property; Real Estate; Liens...................................    20
    3.7     Labor Matters...............................................................    21
    3.8     Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness...    22
    3.9     Government Regulation.......................................................    22
    3.10    Margin Regulations..........................................................    22
    3.11    Taxes.......................................................................    22
    3.12    ERISA.......................................................................    23
    3.13    No Litigation...............................................................    24
    3.14    Intellectual Property.......................................................    24
    3.15    Full Disclosure.............................................................    24
    3.16    Environmental Matters.......................................................    25
    3.17    Insurance...................................................................    25
    3.18    Use of Proceeds.............................................................    25
    3.19    Deposit.....................................................................    26
    3.20    Trade Relations.............................................................    26
    3.21    Compliance With Industry Standards..........................................    26
    3.22    Post-Petition Skymiles Facility.............................................    26
    3.23    Secured, Super-Priority Obligations.........................................    26



                                        i



                                                                                         
    3.24    Certificated Air Carrier....................................................    27
    3.25    U.S. Citizen................................................................    27
    3.26    Spare Parts.................................................................    27
    3.27    Aircraft; Engines...........................................................    27
    3.28    Slots, Primary Gates and Routes.............................................    28
4.  FINANCIAL STATEMENTS AND INFORMATION................................................    28
    4.1     Reports and Notices.........................................................    28
    4.2     Communication with Accountants..............................................    28
5.  AFFIRMATIVE COVENANTS...............................................................    29
    5.1     Maintenance of Existence and Conduct of Business............................    29
    5.2     Payment of Charges..........................................................    29
    5.3     Books and Records...........................................................    30
    5.4     Insurance; Damage to or Destruction of Collateral...........................    30
    5.5     Compliance with Laws........................................................    32
    5.6     Intellectual Property.......................................................    32
    5.7     Environmental Matters.......................................................    32
    5.8     Landlords' Agreements; Bailee Letters.......................................    33
    5.9     [Reserved.].................................................................    33
    5.10    Notices.....................................................................    34
    5.11    Further Assurances..........................................................    34
    5.12    Additional Guaranties and Collateral Documents..............................    34
    5.13    Pledged Spare Parts.........................................................    36
    5.14    Aircraft Mortgage; Spare Parts Mortgage; SGR Security Agreement.............    36
    5.15    Slot Utilization............................................................    36
    5.16    ERISA/Labor Matters.........................................................    37
    5.17    Maintenance of Liens and Collateral.........................................    38
    5.18    Use of Proceeds.............................................................    38
    5.19    Cash Management Systems.....................................................    38
    5.20    Appraisals..................................................................    38
    5.21    Post-Closing Covenants......................................................    38
6.  NEGATIVE COVENANTS..................................................................    38
    6.1     Mergers, Subsidiaries, Etc..................................................    38
    6.2     Investments; Loans and Advances.............................................    39
    6.3     Indebtedness................................................................    40
    6.4     Affiliate Transactions......................................................    43
    6.5     Capital Structure and Business..............................................    43
    6.6     Guaranteed Indebtedness.....................................................    43
    6.7     Liens.......................................................................    44
    6.8     Sale of Stock and Assets....................................................    45
    6.9     [Reserved.].................................................................    47
    6.10    Financial Covenants.........................................................    47
    6.11    Hazardous Materials.........................................................    48
    6.12    Sale-Leasebacks.............................................................    48
    6.13    Restricted Payments.........................................................    48
    6.14    Change of Corporate Name or Location; Change of Fiscal Year.................    48
    6.15    No Impairment of Intercompany Transfers.....................................    49




                                       ii



                                                                                         
    6.16    Limitation on Negative Pledge Clauses.......................................    49
    6.17    No Speculative Transactions.................................................    49
    6.18    Real Estate Purchases and Leases............................................    50
    6.19    Changes Relating to Permitted Subordinated Indebtedness and
               Post-Petition Skymiles Facility Documents................................    50
    6.20    Cancellation of Indebtedness................................................    51
7.  TERM................................................................................    51
    7.1     Termination.................................................................    51
    7.2     Survival of Obligations Upon Termination of Financing Arrangements..........    51
8.  EVENTS OF DEFAULT; RIGHTS AND REMEDIES..............................................    52
    8.1     Events of Default...........................................................    52
    8.2     Remedies....................................................................    55
    8.3     Waivers by Credit Parties...................................................    56
9   GUARANTY............................................................................    56
    9.1     Guaranty of Obligations of Borrower.........................................    56
    9.2     Demand by Secured Parties...................................................    57
    9.3     Enforcement of Guaranty.....................................................    57
    9.4     Waiver......................................................................    57
    9.5     Benefit of Guaranty.........................................................    58
    9.6     Modification of Obligations, Etc............................................    58
    9.7     Waiver of Subrogation, Etc..................................................    59
    9.8     Election of Remedies........................................................    59
10  SECURITY............................................................................    60
    10.1    Security....................................................................    60
    10.2    Perfection of Security Interests............................................    61
    10.3    Rights of Lender; Limitations on Lenders' Obligations.......................    63
    10.4    Covenants of the Credit Parties with Respect to Collateral..................    65
    10.5    Performance by Administrative Agent of the Credit Parties' Obligations......    68
    10.6    Limitation on Administrative Agent's duty in Respect of Collateral..........    68
    10.7    Remedies; Rights Upon Default...............................................    68
    10.8    The Administrative Agent's Appointment as Attorney-in-Fact..................    75
    10.9    [Reserved]..................................................................    77
    10.10   Intercreditor Issues........................................................    77
    10.11   Release of Collateral.......................................................    77
11. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF ADMINISTRATIVE AGENT..................    78
    11.1    Assignment and Participations...............................................    78
    11.2    Appointment of Administrative Agent.........................................    80
    11.3    Administrative Agent's Reliance, Etc........................................    81
    11.4    GE Capital and Affiliates...................................................    82
    11.5    Lender Credit Decision......................................................    82
    11.6    Indemnification.............................................................    83
    11.7    Successor Agents............................................................    83
    11.8    Setoff and Sharing of Payments..............................................    84
    11.9    Payments; Non-Funding Lenders; Information; Actions in Concert..............    84
12. SUCCESSORS AND ASSIGNS..............................................................    86




                                       iii



                                                                                         
    12.1    Successors and Assigns......................................................    86
13. MISCELLANEOUS.......................................................................    86
    13.1    Complete Agreement; Modification of Agreement...............................    86
    13.2    Amendments and Waivers......................................................    86
    13.3    Fees and Expenses...........................................................    90
    13.4    No Waiver...................................................................    91
    13.5    Remedies....................................................................    91
    13.6    Severability................................................................    91
    13.7    Conflict of Terms...........................................................    92
    13.8    Confidentiality.............................................................    92
    13.9    GOVERNING LAW...............................................................    92
    13.10   Notices.....................................................................    93
    13.11   Section Titles..............................................................    95
    13.12   Counterparts................................................................    95
    13.13   WAIVER OF JURY TRIAL........................................................    95
    13.14   Press Releases and Related Matters..........................................    95
    13.15   [Reserved]..................................................................    96
    13.16   Advice of Counsel...........................................................    96
    13.17   No Strict Construction......................................................    96



                               INDEX OF APPENDICES

Annex A  (Recitals)                        - Definitions
Annex B  (Section 1.1(a))                  - Letters of Credit
Annex C  (Section 1.7)                     - Cash Management Systems
Annex D  (Section 2.1(f))                  - Closing Checklist
Annex E  (Section 4.1(a))                  - Financial Statements and
                                             Projections -- Reporting
Annex F  (Section 4.1(b))                  - Collateral Reports
Annex G  (Section 6.10)                    - Financial Covenants
Annex H  (Section 11.9(a))                 - Lenders' Wire Transfer Information
Annex I  (Section 13.10)                   - Notice Addresses
Annex J  (from Annex A -
         Commitments Definition)           - Commitments as of Closing Date
Annex K  (from Annex A-
         Permitted Investments Definition) - Investments Guidelines
Annex L  (Section 5.21)                    - Post-Closing Covenants

Exhibit 1.1                 -  Form of Note
Exhibit 1.5(e)              -  Form of Notice of Conversion/Continuation
Exhibit 4.1(b)              -  Form of Borrowing Base Certificate
Exhibit 11.1(a)             -  Form of Assignment Agreement


                                       iv



Exhibit I                   -  Form of Interim Order

Disclosure Schedule 3.1     -  Type of Entity; State of Organization
Disclosure Schedule 3.2     -  Executive Offices, Collateral Locations, FEIN
Disclosure Schedule 3.4(a)  -  Financial Statements
Disclosure Schedule 3.6     -  Real Estate and Leases:
         Part 1             -     Owned Real Estate
         Part 2             -     Material Real Estate Contracts
         Part 3             -     Leases Affecting Owned Real Estate
Disclosure Schedule 3.7     -  Labor Matters
Disclosure Schedule 3.8     -  Ventures, Subsidiaries and Affiliates;
                               Outstanding Stock
Disclosure Schedule 3.11    -  Tax Matters
Disclosure Schedule 3.12    -  ERISA Plans
Disclosure Schedule 3.14    -  Intellectual Property
Disclosure Schedule 3.16    -  Environmental Matters
Disclosure Schedule 3.17    -  Insurance:
         Part 1             -     Insurance Policies
         Part 2             -     Those Insurance Policies with respect to
                                  Collateral
Disclosure Schedule 3.19    -  Deposit
Disclosure Schedule 3.20    -  Trade Relations
Disclosure Schedule 3.26    -  Spare Parts
Disclosure Schedule 3.27    -  Eligible Aircraft; Eligible Engines
Disclosure Schedule 3.28    -  Primary Slots and Primary Routes
Disclosure Schedule 5.1     -  Trade Names
Disclosure Schedule 6.2     -  Existing Investments
Disclosure Schedule 6.3     -  Existing Indebtedness
Disclosure Schedule 6.7     -  Existing Liens
Disclosure Schedule 6.15    -  Restrictions on Intercompany Transfers
Disclosure Schedule 6.16    -  Negative Pledge Clauses
Disclosure Schedule 10.1    -  Commercial Tort Claims
Disclosure Schedule 10.4    -  Pledged Collateral
         Part 1             -     Pledged Shares
         Part 2             -     Pledged Indebtedness

Exhibit A                   -  Form of Power of Attorney
Exhibit B                   -  Form of Aircraft Mortgage
Exhibit C                   -  Form of Copyright Security Agreements
Exhibit D                   -  Form of Mortgage
Exhibit E                   -  Form of SGR Security Agreement
Exhibit F                   -  Form of Spare Parts Mortgage
Exhibit G                   -  Form of Trademark Security Agreements
Exhibit H                   -  Form of Pledge Amendment


                                        v



          This SECURED SUPER-PRIORITY DEBTOR IN POSSESSION CREDIT AGREEMENT
(this "Agreement"), dated as of September 16, 2005, among DELTA AIR LINES, INC.,
a Delaware corporation, as a debtor and debtor in possession under chapter 11 of
title 11 of the Bankruptcy Code (as defined below) ("Borrower"); the other
Credit Parties signatory hereto, each as a debtor and debtor in possession under
chapter 11 of the Bankruptcy Code; GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation (in its individual capacity, "GE Capital"), for itself, as
Lender, and as administrative agent and collateral agent for the Lenders (in
such capacity, the "Administrative Agent"); and the other Lenders signatory
hereto from time to time.

                                    RECITALS

          WHEREAS, on September 14, 2005, (the "Petition Date"), Borrower and
each of the other Credit Parties filed voluntary petitions for relief
(collectively, the "Cases") under chapter 11 of the Bankruptcy Code with the
United States Bankruptcy Court for the Southern District of New York (the
"Bankruptcy Court"); and

          WHEREAS, Borrower and the other Credit Parties are continuing to
operate their respective businesses and manage their respective properties as
debtors and debtors in possession under sections 1107 and 1108 of the Bankruptcy
Code; and

          WHEREAS, Borrower has requested that the Lenders to provide secured
super-priority term loan facilities of up to $1,700,000,000 in order to fund the
continued operation of the Credit Parties' businesses as debtors and debtors in
possession under the Bankruptcy Code; and

          WHEREAS, the Lenders are willing to make available to Borrower such
post-petition loans and other extensions of credit upon the terms and subject to
the conditions set forth herein; and

          WHEREAS, each of the Guarantors has agreed to guaranty the obligations
of Borrower hereunder, and each of the Credit Parties has agreed to secure its
obligations to the Lenders and the L/C Issuers hereunder with, inter alia,
security interests in, and liens on, all of its property and assets, whether
real or personal, tangible or intangible, now existing or hereafter acquired or
arising, with certain exceptions, all as more fully provided herein;

          WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in Annex A and, for purposes of this Agreement and the
other Loan Documents, the rules of construction set forth in Annex A shall
govern. All Annexes, Schedules, Exhibits and other attachments (collectively,
"Appendices") hereto, or expressly identified to this Agreement, are
incorporated herein by reference, and taken together with this Agreement, shall
constitute but a single agreement. These Recitals shall be construed as part of
the Agreement.

          NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:



1. AMOUNT AND TERMS OF CREDIT

          1.1  Credit Facilities.

          (a)  Term Loan A.

               (i) Subject to the terms and conditions hereof, each Term A
Lender agrees to make a term loan (collectively, the "Term Loan A") to Borrower
in an aggregate principal amount equal to (A) on the Closing Date, the least of
(1) its Term A Commitment, (2) its Pro Rata Share of the Term A Borrowing Base
and (3) its Pro Rata Share of the aggregate principal amount of the Term Loan A
approved or authorized by the Interim Order to be made available to Borrower on
such date and (B) on the Entry Date, the lesser of (1) the remainder of its Term
A Commitment and (2) an amount equal to its Pro Rata Share of the then effective
Term A Borrowing Base minus the outstanding amount of Term Loan A made by such
Term A Lender on the Closing Date. The obligations of each Term A Lender
hereunder shall be several and not joint. The Term Loan A shall, upon the
request of any Lender pursuant to Section 1.10, be evidenced by promissory notes
substantially in the form of Exhibit 1.1 (each a "Note" and collectively the
"Notes"), and, upon such request as provided in Section 1.10, Borrower shall
execute and deliver each Note to the applicable Term A Lender. Each Note shall
represent the obligation of Borrower to pay the amount of the applicable Term A
Lender's Term Loan A, together with interest thereon as prescribed in Section
1.5.

               (ii) The aggregate outstanding principal balance of the Term Loan
A shall be due and payable in full in immediately available funds on the
Maturity Date, if not sooner paid in full. No payment with respect to the Term
Loan A may be reborrowed.

               (iii) Each payment of principal with respect to the Term Loan A
shall be paid to the Administrative Agent for the ratable benefit of each Term A
Lender, ratably in proportion to each such Term A Lender's respective Term A
Commitment.

               (iv) Subject to and in accordance with the terms and conditions
contained herein and in Annex B, unless a Default or an Event of Default shall
have occurred and be continuing, each L/C Issuer agrees to issue one or more
Letters of Credit at the request of the Borrower from time to time during the
period commencing on the Closing Date and ending on the earlier of the Maturity
Date and 30 days prior to the Scheduled Maturity Date.

          (b) Term Loan B.

               (i) Subject to the terms and conditions hereof, each Term B
Lender agrees to make a term loan (collectively, the "Term Loan B") on the
Closing Date to Borrower in an aggregate principal amount equal to its Term B
Commitment. The obligations of each Term B Lender hereunder shall be several and
not joint. The Term Loan B shall, upon the request of any Lender pursuant to
Section 1.10, be evidenced by a Note, and, upon such request as provided in
Section 1.10, Borrower shall execute and deliver each Note to the applicable
Term B Lender. Each Note shall represent the


                                       2



obligation of Borrower to pay the amount of the applicable Term B Lender's Term
Loan B, together with interest thereon as prescribed in Section 1.5.

               (ii) The aggregate outstanding principal balance of the Term Loan
B shall be due and payable in full in immediately available funds on the
Maturity Date, if not sooner paid in full. No payment with respect to the Term
Loan B may be reborrowed.

               (iii) Each payment of principal with respect to the Term Loan B
shall be paid to the Administrative Agent for the ratable benefit of each Term B
Lender, ratably in proportion to each such Term B Lender's respective Term B
Commitment.

          (c) Term Loan C.

               (i) Subject to the terms and conditions hereof, each Term C
Lender agrees to make a term loan (collectively, the "Term Loan C") on the
Closing Date to Borrower in an aggregate principal amount equal to its Term C
Commitment. The obligations of each Term C Lender hereunder shall be several and
not joint. The Term Loan C shall, upon the request of any Lender pursuant to
Section 1.10, be evidenced by a Note, and, upon such request as provided in
Section 1.10, Borrower shall execute and deliver each Note to the applicable
Term C Lender. Each Note shall represent the obligation of Borrower to pay the
amount of the applicable Term C Lender's Term Loan C, together with interest
thereon as prescribed in Section 1.5.

               (ii) The aggregate outstanding principal balance of the Term Loan
C shall be due and payable in full in immediately available funds on the
Maturity Date, if not sooner paid in full. No payment with respect to the Term
Loan C may be reborrowed.

               (iii) Each payment of principal with respect to the Term Loan C
shall be paid to the Administrative Agent for the ratable benefit of each Term C
Lender, ratably in proportion to each such Term C Lender's respective Term C
Commitment.

          1.2  Prepayments.

          (a) Voluntary Prepayments. Borrower may at any time on at least three
(3) Business Days' prior written notice to the Administrative Agent, voluntarily
prepay all or part of the Term Loan; provided that any such prepayment shall be
in a minimum amount of $5,000,000 and integral multiples of $250,000 in excess
of such amount and shall be accompanied by payment of any LIBOR funding breakage
costs in accordance with Section 1.11(b); provided, further, that any such
prepayment shall be applied pursuant to Section 1.3.

          (b) Mandatory Prepayments.

               (i) If at any time the aggregate outstanding principal amount of
the Term Loan A exceeds the Term A Borrowing Base, Borrower shall immediately
repay the aggregate outstanding amount of the Term Loan A to the extent required
to eliminate such excess.


                                       3



               (ii) Upon receipt by any Credit Party of Net Cash Proceeds
arising from an Asset Sale (other than an Asset Sale of Skymiles Collateral) or
Property Loss Event, Borrower shall immediately prepay the Loans in an amount
equal to 100% of such Net Cash Proceeds; provided, that, immediately upon
receipt by any Credit Party of such Net Cash Proceeds, Borrower may, at its
option, deposit 100% of such Net Cash Proceeds in the Cash Collateral Account,
in each case, to be applied in accordance with Section 1.2(c).

          (c) Application of Net Cash Proceeds. Any Net Cash Proceeds received
by Borrower or any other Credit Party or the Administrative Agent under any Loan
Document (except as otherwise expressly provided herein or therein) shall be
applied pursuant to Section 1.3; provided, however, that, in the event Borrower
has elected to deposit such Net Cash Proceeds in the Cash Collateral Account in
accordance with Section 1.2(b)(ii):

               (i) upon any Asset Sale of Collateral included in the Term A
     Borrowing Base, the Administrative Agent shall (A) upon receipt of a
     Borrowing Base Certificate prior to the Prepayment Date that includes one
     or more assets (the "Replacement Borrowing Base Assets" and which, other
     than in the case of Aircraft or Engines, may consist of any type of asset
     eligible to be included in the Term A Borrowing Base and, in the case of
     Aircraft or Engines, shall consist of Additional Aircraft or Additional
     Engines, as the case may be) replacing the asset or assets (the "Original
     Borrowing Base Assets") giving rise to such Net Cash Proceeds, release to
     Borrower an amount equal to (1) such Net Cash Proceeds minus (2) the
     amount, if any, by which (x) the Allocated Amount for the Original
     Borrowing Base Assets exceeds (y) the Allocated Amount for the Replacement
     Borrowing Base Assets and (B) on the earlier of (1) the election by the
     Administrative Agent, the Requisite Term A Lenders, the Requisite Term B
     Lenders or the Requisite Term C Lenders following the occurrence of any
     Event of Default and (2) the Prepayment Date, apply the balance of such Net
     Cash Proceeds pursuant to Section 1.3;

               (ii) upon a Reinvestment Event, all or a portion of such Net Cash
     Proceeds, as specified in a Reinvestment Notice, shall be used to acquire
     or construct Permitted Reinvestment Collateral (the "Reinvestment Deferred
     Amount") and such Reinvestment Deferred Amount shall, within five (5)
     Business Days of delivery of a Reinvestment Release Request, be released to
     Borrower to acquire or construct such Permitted Reinvestment Collateral
     until the Reinvestment Prepayment Date corresponding thereto, on which date
     the remaining Net Cash Proceeds, if any, shall be applied pursuant to
     Section 1.3;

               (iii) upon a Property Loss Event involving any Aircraft or
     Engines, Borrower shall comply with the applicable notice provisions and
     requirements for Replacement Aircraft or Replacement Engines as set forth
     in the Aircraft Mortgage; and

               (iv) upon a Property Loss Event involving any Real Estate subject
     to a Mortgage, Borrower shall comply with the applicable provisions and
     requirements set forth in such Mortgage.


                                       4



          (d) No Implied Consent. Nothing in this Section 1.2 shall be construed
to constitute the Administrative Agent's or Lender's consent to any transaction
that is not permitted by other provisions of this Agreement or the other Loan
Documents.

          1.3 Priority and Application of Payments.

          So long as no Event of Default has occurred and is continuing,
payments matching specific scheduled or required payments then due shall be
applied to those scheduled or required payments. As to any other payment and as
to all payments made when an Event of Default has occurred and is continuing or
following the Maturity Date, Borrower hereby irrevocably waives the right to
direct the application of any and all payments received from or on behalf of
Borrower, and Borrower and each Secured Party hereby irrevocably agrees that the
Administrative Agent shall have the continuing exclusive right to apply any and
all such payments against the Obligations as follows: first, to Fees and
reimbursable expenses of the Administrative Agent then due and payable pursuant
to any of the Loan Documents; second, to unpaid Fees and reimbursable expenses
of the Arrangers due and payable as of Entry Date pursuant to the any of the
Loan Documents; third, to Fees and reimbursable expenses of Term A Lenders and
Letter of Credit Obligations of L/C Issuers then due and payable pursuant to any
of the Loan Documents; fourth, to interest then due and payable on the Term Loan
A; fifth, to prepay the remaining principal amount of the Term Loan A, until the
Term Loan A shall have been paid in full; sixth, to all other Obligations then
due and payable to the Term A Lenders; seventh, to Fees and reimbursable
expenses of Term B Lenders then due and payable pursuant to any of the Loan
Documents; eighth, to interest then due and payable on the Term Loan B; ninth,
to prepay the remaining principal amount of the Term Loan B, until the Term Loan
B shall have been paid in full; tenth, to all other Obligations then due and
payable to the Term B Lenders; eleventh, to Fees and reimbursable expenses of
Term C Lenders then due and payable pursuant to any of the Loan Documents;
twelfth, to interest then due and payable on the Term Loan C; thirteenth, to
prepay the remaining principal amount of the Term Loan C, until the Term Loan C
shall have been paid in full; and last, to all other Obligations then due and
payable to the Term C Lenders. All payments and prepayments applied to a
particular Loan shall be applied ratably to the portion thereof held by each
Lender as determined by its Pro Rata Share. Notwithstanding anything herein to
the contrary, no Credit Party shall be obligated to make any payment to any
Secured Party under any Loan Document from the proceeds of Skymiles Collateral
at any time after the delivery to Borrower of a Notice of Actionable Default and
until the withdrawal of all pending Notices of Actionable Default except as and
to the extent set forth in the Skymiles Intercreditor Agreement.

          1.4 Use of Proceeds.

          Borrower shall utilize the proceeds of the Loans and Letters of Credit
solely for the refinancing of the obligations under the Existing Credit
Agreement and the Existing Skymiles Facility pursuant to Section 2.1(j) and
Section 2.1(k) and for the general corporate purposes of the Credit Parties.


                                       5



          1.5 Interest and Applicable Margins.

          (a) Borrower shall pay interest to the Administrative Agent, for the
ratable benefit of Lenders in accordance with the various Loans being made by
each Lender, in arrears on each applicable Interest Payment Date, at the
following rates: (i) with respect to the Term Loan A, at the election of
Borrower, (A) the Index Rate plus the Applicable Term A Index Margin per annum
or (B) at the election of Borrower, the applicable LIBOR Rate plus the
Applicable Term A LIBOR Margin per annum; (ii) with respect to the Term Loan B,
at the election of Borrower, (A) the Index Rate plus the Applicable Term B Index
Margin per annum or (B) the applicable LIBOR Rate plus the Applicable Term B
LIBOR Margin per annum; and (iii) with respect to the Term Loan C, at the
election of Borrower, (A) the Index Rate plus the Applicable Term C Index Margin
per annum or (B) the applicable LIBOR Rate plus the Applicable Term C LIBOR
Margin per annum.

          The applicable margins are as follows:

                                           
          Applicable Term A Index Margin...   4.25%
          Applicable Term A LIBOR Margin...   5.00%
          Applicable Term B Index Margin...   6.25%
          Applicable Term B LIBOR Margin...   7.00%
          Applicable Term C Index Margin...   8.25%
          Applicable Term C LIBOR Margin...   9.00%



          (b) If any payment on any Loan becomes due and payable on a day other
than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.

          (c) All computations of interest shall be made by the Administrative
Agent on the basis of a 360-day year (or, in the case of interest calculated
based on the Index Rate, a 365/366 day year), in each case for the actual number
of days occurring in the period for which such interest is payable. The Index
Rate is a floating rate determined for each day. Each determination by the
Administrative Agent of interest rates hereunder shall be presumptive evidence
of the correctness of such rates.

          (d) So long as an Event of Default has occurred and is continuing
under Section 8.1(a), or so long as any other Event of Default has occurred and
is continuing and at the election of any of (i) the Administrative Agent, (ii)
the Requisite Term A Lenders, (iii) the Requisite Term B Lenders or (iv) the
Requisite Term C Lenders confirmed by written notice from the Administrative
Agent to Borrower, (A) the interest rates applicable to the Loans shall be
increased by two percentage points (2%) per annum above the rates of interest
otherwise applicable to such Loans hereunder (the "Default Rate"), and (B) all
other outstanding


                                       6



Obligations shall bear interest at the Default Rate applicable to the Term Loan
C. Interest at the Default Rate shall accrue from the initial date of such Event
of Default until that Event of Default is cured or waived and shall be payable
upon demand.

          (e) So long as no Event of Default has occurred and is continuing,
Borrower shall have the option to (i) convert at any time all or any part of
outstanding Loans from Index Rate Loans to LIBOR Loans, (ii) convert any LIBOR
Loan to an Index Rate Loan, subject to payment of LIBOR breakage costs in
accordance with Section 1.11(b) if such conversion is made prior to the
expiration of the LIBOR Period applicable thereto, or (iii) continue all or any
portion of any Loan as a LIBOR Loan upon the expiration of the applicable LIBOR
Period and the succeeding LIBOR Period of that continued Loan shall commence on
the first day after the last day of the LIBOR Period of the Loan to be
continued. Any Loan or group of Loans having the same proposed LIBOR Period to
be made or continued as, or converted into, a LIBOR Loan must be in a minimum
amount of $5,000,000 and integral multiples of $500,000 in excess of such
amount. Any such election must be made by 11:00 a.m. (New York time) on the
third Business Day prior to (1) the date of any proposed borrowing which is to
bear interest at the LIBOR Rate, (2) the end of each LIBOR Period with respect
to any LIBOR Loans to be continued as such, or (3) the date on which Borrower
wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR Period
designated by Borrower in such election. If no election is received with respect
to a LIBOR Loan by 11:00 a.m. (New York time) on the third Business Day prior to
the end of the LIBOR Period with respect thereto (or if an Event of Default has
occurred and is continuing), that LIBOR Loan shall be converted to an Index Rate
Loan at the end of its LIBOR Period. Borrower must make such election by notice
to the Administrative Agent in writing, by telecopy or overnight courier. In the
case of any conversion or continuation, such election must be made pursuant to a
written notice (a "Notice of Conversion/Continuation") in the form of Exhibit
1.5(e). No Loan may be made as or converted into a LIBOR Loan until after five
(5) Business Days following the Closing Date and, until the earlier of ninety
(90) days following the Closing Date and completion of primary syndication of
the Loans as determined by the Arrangers, no Loan may be converted into a LIBOR
Loan that has an interest period of more than one week.

          (f) Notwithstanding anything to the contrary set forth in this Section
1.5, if a court of competent jurisdiction determines in a final order that the
rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by the Administrative
Agent, on behalf of applicable Lenders, is equal to the total interest that
would have been received had the interest rate payable hereunder been (but for
the operation of this paragraph) the interest rate payable since the Closing
Date as otherwise provided in this Agreement. In no event shall the total
interest received by any Lender pursuant to the terms hereof exceed the amount
that such Lender could lawfully have received had the interest due hereunder
been calculated for the full term hereof at the Maximum Lawful Rate.


                                       7



          1.6 Term A Borrowing Base.

          The Administrative Agent shall have the right to modify or eliminate
Reserves against Eligible Accounts, Eligible Unbilled Accounts and Eligible
Refundable Ticket Accounts, Eligible Real Estate, Eligible Aircraft, Eligible
Engines, Eligible Spare Parts, Eligible Ground Service Equipment, Eligible
Flight Simulators and Eligible Tooling from time to time in its reasonable
credit judgment. In addition, the Administrative Agent reserves the right, at
any time and from time to time after the Closing Date, to adjust any of the
eligibility criteria and to establish new eligibility criteria, and to adjust
advance rates with respect to Eligible Accounts, Eligible Unbilled Accounts and
Eligible Refundable Ticket Accounts, Eligible Real Estate, Eligible Aircraft,
Eligible Engines, Eligible Spare Parts, Eligible Ground Service Equipment,
Eligible Flight Simulators and Eligible Tooling, in its reasonable credit
judgment, reflecting changes in the collectibility or realization values (in the
case of Accounts) or changes in the Fair Market Value or Net Orderly Liquidation
Value (in the case of the other components of the Term A Borrowing Base), in
each case, arising or discovered by the Administrative Agent after the Closing
Date, subject to the approval of each of the Supermajority Term A Lenders, the
Requisite Term B Lenders and the Requisite Term C Lenders in the case of
adjustments or new eligibility criteria, reductions in the amount of the
Reserves in effect on the Closing Date or changes in advance rates which have
the effect of making more credit available.

          1.7 [Reserved.]

          1.8 Fees.

          Borrower shall pay to GE Capital the Fees specified in the Fee
Letters.

          1.9 Receipt of Payments.

          Borrower shall make each payment under this Agreement not later than
2:00 p.m. (New York time) on the day when due in immediately available funds in
Dollars to the Collection Account. For purposes of computing interest as of any
date, all payments shall be deemed received on the Business Day on which
immediately available funds therefor are received in the Collection Account
prior to 2:00 p.m. New York time. Payments received after 2:00 p.m. New York
time on any Business Day or on a day that is not a Business Day shall be deemed
to have been received on the following Business Day.

          1.10 Loan Account and Accounting.

          The Administrative Agent shall maintain a loan account (the "Loan
Account") on its books to record each of Term Loan A, Term Loan B and Term Loan
C, all payments made by Borrower with respect to such Term Loan, and all other
debits and credits as provided in this Agreement with respect to such Term Loan
or any other Obligations with respect to such Term Loan. All entries in the Loan
Account shall be made in accordance with the Administrative Agent's customary
accounting practices as in effect from time to time. The balance in the Loan
Account, as recorded on the Administrative Agent's most recent printout or other
written statement, shall, absent manifest error, be presumptive evidence of the
amounts due and owing to the Administrative Agent and the Lenders by Borrower;
provided, that any failure to so record or any error in so recording shall not
limit or otherwise affect Borrower's duty to pay the


                                       8



Obligations with respect to the Term Loans. The Administrative Agent shall
render to Borrower a monthly accounting of transactions with respect to each
Term Loan setting forth the balance of the Loan Account for the immediately
preceding month. Any Lender may elect, by notice to Borrower and the
Administrative Agent, to have such Lender's Term Loan be evidenced by a Note
issued to that Lender. If no such Note is requested, such Lender may rely on the
Term Loan Account as evidence of the amount of Obligations with respect to the
Term Loan from time to time owing to it. Unless Borrower notifies the
Administrative Agent in writing of any objection to any such accounting
(specifically describing the basis for such objection), within thirty (30) days
after the date thereof, each and every such accounting shall be presumptive
evidence of all matters reflected therein. Only those items expressly objected
to in such notice shall be deemed to be disputed by Borrower.

          1.11 Indemnity.

          (a) Each Credit Party that is a signatory hereto shall jointly and
severally indemnify and hold harmless each of the Administrative Agent, Lenders
and their respective Affiliates, and each such Person's respective officers,
directors, employees, attorneys, agents and representatives (each, an
"Indemnified Person"), from and against any and all suits, actions, proceedings,
claims, damages, losses, liabilities and expenses (including reasonable
attorneys' fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) that may be instituted or asserted
against or incurred by any such Indemnified Person as the result of credit
having been extended, suspended or terminated under this Agreement and the other
Loan Documents and the administration of such credit, and in connection with or
arising out of the transactions contemplated hereunder and thereunder and any
actions or failures to act in connection therewith, including any and all
Environmental Liabilities and legal costs and expenses arising out of or
incurred in connection with disputes between or among any parties to any of the
Loan Documents, and associated with Electronic Transmissions or E-Systems as
well as failures caused by Borrower's equipment, software, services or otherwise
used in connection therewith (collectively, "Indemnified Liabilities");
provided, that no such Credit Party shall be liable for any indemnification to
an Indemnified Person to the extent that any such suit, action, proceeding,
claim, damage, loss, liability or expense results from that Indemnified Person's
gross negligence or willful misconduct. NO INDEMNIFIED PERSON SHALL BE
RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR,
ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING
CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY
OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

          (b) To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to
the last day of any applicable LIBOR Period (whether that repayment is made
pursuant to any provision of this Agreement or any other Loan Document or occurs
as a result of acceleration, by operation of law or otherwise); (ii) Borrower
shall default in payment when due of the principal amount of or interest on any
LIBOR Loan; (iii) Borrower shall refuse to accept any borrowing of, or shall


                                       9



request a termination of any borrowing, conversion into or continuation of LIBOR
Loans after Borrower has given notice requesting the same in accordance
herewith; or (iv) Borrower shall fail to make any prepayment of a LIBOR Loan
after Borrower has given a notice thereof in accordance herewith, then Borrower
shall indemnify and hold harmless each Lender from and against any loss or
expense arising from the reemployment of funds obtained by it or from fees
payable to terminate deposits from which such funds were obtained. For the
purpose of calculating amounts payable to a Lender under this subsection, each
Lender shall be deemed to have actually funded its relevant LIBOR Loan through
the purchase of a deposit bearing interest at the LIBOR Rate in an amount equal
to the amount of that LIBOR Loan and having a maturity comparable to the
relevant LIBOR Period; provided, that each Lender may fund each of its LIBOR
Loans in any manner it sees fit, and the foregoing assumption shall be utilized
only for the calculation of amounts payable under this subsection. This covenant
shall survive the termination of this Agreement and the payment of the Notes and
all other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower with its written calculation
of all amounts payable pursuant to this Section 1.11(b), and such calculation
shall be binding on the parties hereto unless Borrower shall object in writing
within thirty (30) days of receipt thereof, specifying the basis for such
objection in detail.

          1.12 Access.

          (a) Each Credit Party shall, during normal business hours, from time
to time upon five (5) Business Days' prior notice as frequently as the
Administrative Agent reasonably determines to be appropriate (and subject to
such other restrictions on inspections set forth in the Aircraft Mortgage with
respect to Aircraft and Engines or the Spare Parts Mortgage with respect to
Spare Parts): (i) provide the Administrative Agent and any of its officers,
employees and agents access to its officers and employees, and with prior notice
and the opportunity to be present, advisors of each Credit Party, (ii) permit
the Administrative Agent, and any of its officers, employees and agents, to
inspect, audit and make extracts from any Credit Party's Books and Records
(subject to requirements under any confidentiality agreements, if applicable) ,
and (iii) permit the Administrative Agent, and any of its officers, employees
and agents, to have access to properties, facilities and to the Collateral and
to inspect, audit, review, evaluate, conduct field examinations and make test
verifications and counts of the Accounts, Inventory and other Collateral of any
Credit Party; provided, that so long as no Event of Default has occurred and is
continuing, such access and inspections shall not be permitted more frequently
than (A) once in any calendar quarter with respect to any Collateral of the type
described in clauses (d) through (m) of the definition of "Term A Borrowing
Base," (B) twice every calendar year with respect to any Collateral of the type
described in clauses (a) through (c) of the definition of "Term A Borrowing
Base," and (C) as set forth in the other applicable Collateral Documents.
Representatives of other Lenders may accompany the Administrative Agent's
representatives on regularly scheduled audits at no charge to Borrower. Each
Credit Party shall make available to the Administrative Agent and its counsel
reasonably promptly originals or copies of all Books and Records (subject to
requirements under any confidentiality agreements, if applicable) that the
Administrative Agent may reasonably request. Each Credit Party shall deliver any
document or instrument necessary for the Administrative Agent, as it may from
time to time request, to obtain records from any service bureau or other Person
that maintains records for such Credit Party and shall maintain supporting
documentation on media, including computer


                                       10



tapes and discs owned by such Credit Party. The Administrative Agent will give
Lenders at least five (5) days' prior written notice of regularly scheduled
audits.

          (b) If an Event of Default has occurred and is continuing, each such
Credit Party shall provide such access as set forth in clause (a) above to the
Administrative Agent and to each Lender at all times and without advance notice.
Furthermore, so long as any Event of Default has occurred and is continuing,
Borrower shall provide the Administrative Agent and each Lender with access,
with prior notice and opportunity for Borrower to be present, to its suppliers,
service providers and customers.

          1.13 Taxes.

          (a) Any and all payments by Borrower hereunder or under the Notes
shall be made, in accordance with this Section 1.13, free and clear of and
without deduction for any and all present or future Taxes. If Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Notes, (i) unless such Taxes are imposed as the result of
a determination that an applicable Certificate of Exemption (as defined in
Section 1.13(c)) did not entitle a Foreign Lender to an exemption from such
Taxes at the time such Foreign Lender became a Lender hereunder, the sum payable
shall be increased as much as shall be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 1.13) the Administrative Agent or Lenders, as applicable,
receive an amount equal to the sum they would have received had no such
deductions been made, (ii) Borrower shall make such deductions, and (iii)
Borrower shall pay the full amount deducted to the relevant taxing or other
authority in accordance with applicable law. Within thirty (30) days after the
date of any such payment of Taxes, Borrower shall furnish to the Administrative
Agent the original or a certified copy of a receipt evidencing payment thereof.

          (b) Borrower shall indemnify and, within ten (10) days of demand
therefor, pay the Administrative Agent and each Lender for the full amount of
Taxes paid by the Administrative Agent or such Lender, as appropriate, with
respect to payments received from Borrower hereunder and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes were correctly or legally asserted unless
such Taxes are imposed as the result of a determination that establishes that an
applicable Certificate of Exemption did not in fact entitle a Foreign Lender to
an exemption from such Taxes at the time such Foreign Lender became a Lender
hereunder.

          (c) Each Person organized under the laws of a jurisdiction outside the
United States (a "Foreign Person") as to which payments to be made under this
Agreement or under the Notes are completely exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to
Borrower and the Administrative Agent a properly completed and executed IRS Form
W-8ECI or Form W-8BEN or other applicable form, certificate or document
prescribed by the IRS or the United States certifying as to such Foreign
Person's entitlement to such complete exemption (a "Certificate of Exemption").
Any Foreign Person that seeks to become a Lender under this Agreement shall
provide a Certificate of Exemption to Borrower and the Administrative Agent
prior to becoming a Lender hereunder. No Foreign Person may become a Lender
hereunder if such Foreign Person fails to deliver a Certificate of Exemption in
advance of becoming a Lender. For the avoidance of doubt, (i) any Sale described
in Section


                                       11



11.1(a) to a Foreign Person shall only become effective upon delivery by the
party to whom such Sale is made to the Borrower and the Administrative Agent of
a Certificate of Exemption, and (ii) any participant or SPV described in Section
11.1(e) shall not be entitled to any benefit under Section 1.13 unless such
participant or SPV delivers to Borrower and the Administrative Agent a
Certificate of Exemption. In addition, any Lender that is not a Foreign Person
and that is a partnership or trust for U.S. federal income tax purposes shall
not be entitled to any payment by Borrower pursuant to Section 1.13(b) with
respect to any Taxes paid by such Lender with respect to any Foreign Person that
is a partner or owner of an interest in such Lender unless such Lender had
obtained a Certificate of Exemption from such Foreign Person at the later of the
times (i) such Lender became a Lender hereunder and (ii) such Foreign Person
became a partner or owner of an interest in such Lender.

          (d) Each Lender agrees that, as promptly as practicable after it
becomes aware of any circumstance that would result in any additional payment by
Borrower pursuant to Section 1.13(a) or (b), such Lender shall, to the extent
not inconsistent with such Lender's internal policies of general application use
reasonable commercial efforts to mitigate any Taxes that would result in such
payments by Borrower. If Borrower is required to pay additional amounts to or
for the account of any Lender pursuant to this Section 1.13, then such Lender,
at the request of Borrower and at Borrower's expense, will change the
jurisdiction of its lending office if such change (i) will eliminate or reduce
any such additional payment which may thereafter accrue and (ii) as determined
by such Lender in its sole discretion, is not otherwise materially
disadvantageous to such Lender, provided, that the mere existence of fees,
charges, costs or expenses that such Borrower has offered and agreed to pay on
behalf of a Lender shall not be deemed to be disadvantageous to such Lender.

          1.14 Capital Adequacy; Increased Costs; Illegality.

          (a) If any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy, reserve requirements
or similar requirements or compliance by any Lender with any request or
directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law), in each case, adopted
after the Closing Date, from any central bank or other Governmental Authority
increases or would have the effect of increasing the amount of capital, reserves
or other funds required to be maintained by such Lender and thereby reducing the
rate of return on such Lender's capital as a consequence of its obligations
hereunder, then Borrower shall from time to time upon demand by such Lender
(with a copy of such demand to the Administrative Agent) pay to the
Administrative Agent, for the account of such Lender, additional amounts
sufficient to compensate such Lender for such reduction. A certificate as to the
amount of that reduction and showing the basis of the computation thereof
submitted by such Lender to Borrower and to the Administrative Agent shall be
presumptive evidence of the matters set forth therein.

          (b) If, due to either (i) the introduction of or any change in any law
or regulation (or any change in the interpretation thereof) other than in
respect of taxes (including income taxes) or (ii) the compliance with any
guideline or request from any central bank or other non-tax Governmental
Authority (whether or not having the force of law), in each case occurring after
the Closing Date, there shall be any increase in the cost to any Lender of
agreeing to make or making, funding or maintaining any Loan, then Borrower shall
from time to time, upon


                                       12



demand by such Lender (with a copy of such demand to the Administrative Agent),
pay to the Administrative Agent for the account of such Lender additional
amounts sufficient to compensate such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to Borrower and
to the Administrative Agent by such Lender, shall be presumptive evidence of the
matters set forth therein. Each Lender agrees that, as promptly as practicable
after it becomes aware of any circumstances referred to above which would result
in any such increased cost, the affected Lender shall, to the extent not
inconsistent with such Lender's internal policies of general application, use
reasonable commercial efforts to minimize costs and expenses incurred by it and
payable to it by Borrower pursuant to this Section 1.14(b).

          (c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) after the Closing Date shall make it unlawful, or any
central bank or other Governmental Authority shall assert that it is unlawful,
for any Lender to agree to make or to make or to continue to fund or maintain
any LIBOR Loan, then, unless that Lender is able to make or to continue to fund
or to maintain such LIBOR Loan at another branch or office of that Lender
without, in that Lender's reasonable opinion, materially and adversely affecting
it or its Loans or the income obtained therefrom, on notice thereof and demand
therefor by such Lender to Borrower through the Administrative Agent, (i) the
obligation of such Lender to agree to make or to make or to continue to fund or
maintain LIBOR Loans shall terminate and (ii) Borrower shall forthwith prepay in
full all outstanding LIBOR Loans owing to such Lender, together with interest
accrued thereon, unless Borrower, within five (5) Business Days after the
delivery of such notice and demand, converts all LIBOR Loans into Index Rate
Loans.

          (d) Failure on the part of any Lender to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Lender's right to demand compensation with respect to such period or any
other period, provided, that Borrower shall not be required to compensate a
Lender pursuant to this Section 1.14 for any increased costs or reductions
incurred more than 270 days prior to the date that such Lender notifies Borrower
of the circumstance giving rise to such increased costs or reductions and of
such Lender's intention to claim compensation therefor.

          (e) Within thirty (30) days after receipt by Borrower of written
notice and demand from any Lender (an "Affected Lender") for payment of
additional amounts or increased costs as provided in Sections 1.13(a), 1.13(b),
1.14(a) or 1.14(b), Borrower may, at its option, notify the Administrative Agent
and such Affected Lender of its intention to replace the Affected Lender. So
long as no Default or Event of Default has occurred and is continuing, Borrower,
with the consent of the Administrative Agent, may obtain, at Borrower's expense,
a replacement Lender ("Replacement Lender") for the Affected Lender, which
Replacement Lender must be reasonably satisfactory to the Administrative Agent.
If Borrower obtains a Replacement Lender within ninety (90) days following
notice of its intention to do so, the Affected Lender must sell and assign its
Loans and Commitments to such Replacement Lender for an amount equal to the
principal balance of all Loans held by the Affected Lender and all accrued and
unpaid interest and Fees with respect thereto through the date of such sale and
such assignment shall not require the payment of an assignment fee to the
Administrative Agent; provided, that Borrower shall have reimbursed such
Affected Lender for the additional amounts or increased


                                       13



costs that it is entitled to receive under this Agreement through the date of
such sale and assignment. Notwithstanding the foregoing, Borrower shall not have
the right to obtain a Replacement Lender if the Affected Lender rescinds its
demand for increased costs or additional amounts within fifteen (15) days
following its receipt of Borrower's notice of intention to replace such Affected
Lender. Furthermore, if Borrower gives a notice of intention to replace and does
not so replace such Affected Lender within ninety (90) days thereafter,
Borrower's rights under this Section 1.14(e) shall terminate with respect to
such Affected Lender and Borrower shall promptly pay all increased costs or
additional amounts demanded by such Affected Lender pursuant to Sections
1.13(a), 1.13(b), 1.14(a) or 1.14(b).

          1.15 Regulation D Compensation.

          If and so long as a reserve requirement of the type referred to in
clause (i)(B) below is prescribed by the Federal Reserve Board (or any
successor), each Lender subject to such requirement may require Borrower to pay,
contemporaneously with each payment of interest on each such Lender's LIBOR
Loans, additional interest on such LIBOR Loan at a rate per annum determined by
such Lender up to but not exceeding the excess of (i) (A) the applicable LIBOR
Rate divided by (B) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day that is two (2) LIBOR Business Days prior to
the beginning of such LIBOR Period (including basic, supplemental, marginal and
emergency reserves under any regulations of the Federal Reserve Board or other
Governmental Authority having jurisdiction with respect thereto, as now and from
time to time in effect) for Eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Federal Reserve Board) that
are required to be maintained by a member bank of the Federal Reserve System
over (ii) the applicable LIBOR Rate.

2.   CONDITIONS PRECEDENT

          2.1 Conditions to Closing.

          This Agreement, including the obligation of each Lender to make the
Loans requested to be made by it, shall not become effective until the date (the
"Closing Date") on which each of the following conditions precedent is satisfied
or provided for in a manner reasonably satisfactory to the Administrative Agent,
or duly waived in writing in accordance with Section 13.2:

          (a) Bankruptcy Court Orders. The Bankruptcy Court shall have entered
the Interim Order no later than seven days after the commencement of the Cases
or, if the Closing Date is more than 35 days (or such longer period not to
exceed 55 days as the Arrangers shall agree in their sole discretion) after the
commencement of the Cases, the Bankruptcy Court shall have entered the Final
Order by the 35th day (or the 55th day if agreed by the Arrangers in their sole
discretion) following the Petition Date, and the Clerk of the Bankruptcy Court
shall have certified that such Order has been duly entered, and such Order shall
be in full force and effect and shall not have been vacated, reversed, modified,
amended or stayed without the prior written consent of the Administrative Agent
and the Requisite Lenders.


                                       14



          (b) First Day Orders. All First Day Orders entered into on or prior to
the Closing Date, and all motions related thereto, including, without
limitation, those related to the Loans, the Loan Documents, the Post-Petition
Skymiles Facility and cash management, entered by the Bankruptcy Court in the
Cases shall be in form and substance reasonably satisfactory to the
Administrative Agent and its counsel; provided, that the satisfaction or waiver
of such condition shall not be deemed a suspension or waiver of any Default or
Event of Default arising therefrom or related thereto.

          (c) Credit Agreement. This Agreement or counterparts hereof shall have
been duly executed by, and delivered to, each of Borrower, the other Credit
Parties, the Administrative Agent and the Lenders.

          (d) Post-Petition Skymiles Facility. Each of the Post-Petition
Skymiles Facility Documents shall be in full force and effect, in form and
substance reasonably satisfactory to Administrative Agent, and the transactions
contemplated thereunder shall have been consummated in accordance therewith
concurrently with the Closing Date, including the funding of the Bankruptcy
Loans (as defined in the Post-Petition Skymiles Facility Documents) thereunder
in an aggregate principal amount of not less than $350,000,000.

          (e) Skymiles Intercreditor Agreement. Administrative Agent shall have
received the Skymiles Intercreditor Agreement or counterparts thereof, duly
executed by, and delivered to, Administrative Agent and Amex and duly
acknowledged by each Credit Party.

          (f) Loan Documents. The Administrative Agent shall have received such
documents, instruments, agreements and legal opinions listed on Annex D, and
such other documents, instruments, agreements and legal opinions as the
Administrative Agent shall request, in its discretion exercised reasonably in
accordance with their customary business practices for comparable debtor in
possession transactions, in connection with the transactions contemplated by
this Agreement and the other Loan Documents, each in form and substance
reasonably satisfactory to the Administrative Agent.

          (g) Approvals. The Administrative Agent shall have received (i)
satisfactory evidence that the Credit Parties have obtained all required
consents and approvals of all Persons, including all requisite Governmental
Authorities, to the execution and delivery of this Agreement and the other Loan
Documents, (ii) satisfactory evidence that the Credit Parties have obtained all
material governmental and third party approvals or waivers necessary in
connection with the performance and consummation of this Agreement and the other
Loan Documents and the continuing operations of Borrower and its Subsidiaries
shall have been obtained and be in full force and effect, or (iii) an officer's
certificate in form and substance reasonably satisfactory to the Administrative
Agent affirming that no such consents or approvals are required.

          (h) Payment of Fees; Satisfaction of Conditions. Borrower shall have
paid the Fees required to be paid on or prior to the Closing Date in the
respective amounts specified in the Fee Letters, and shall have reimbursed the
Administrative Agent and the Arrangers for all fees, costs and expenses of
closing presented as of the Closing Date and the other conditions set forth in
the Fee Letters shall have been satisfied.


                                       15



          (i) [Reserved.]

          (j) Refinancing of Existing Credit Agreement. Concurrently with the
Closing Date, (i) all obligations under the Existing Credit Agreement shall have
been repaid in full, and (ii) the Existing Credit Agreement and all Loan
Documents (as defined therein) shall have been terminated on terms satisfactory
to the Administrative Agent.

          (k) Refinancing of Existing Skymiles Facility. Concurrently with the
Closing Date, (i) all obligations under the Existing Skymiles Facility shall
have been repaid in full, and (ii) the Existing Skymiles Facility Documents
shall have been terminated or ceased to be effective or otherwise modified on
terms satisfactory to the Administrative Agent.

          (l) No Material Adverse Effect. There has been no Material Adverse
Effect since the date of Borrower's Form 10-Q for the six-month period ended
June 30, 2005 as updated by subsequent public filings prior to September 10,
2005.

          (m) No Action, Suit, Litigation. Other than the Cases, there shall
exist no unstayed action, suit, investigation, litigation, or proceeding pending
(or, to the knowledge of any officer of Borrower or any other Credit Party,
threatened) in any court or before any arbitrator or governmental
instrumentality, which could reasonably be expected to result in a Material
Adverse Effect.

          (n) No Violation of Law or Injunction. The consummation of the
transactions contemplated hereby shall not, after giving effect to such
transactions, (i) violate any applicable law, statute, rule or regulation or
(ii) conflict with, or result in a default or event of default under, any
material agreement of Borrower or any of its Subsidiaries entered into or
assumed after the commencement of the Cases, and there shall be in effect no
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of, or imposing adverse conditions on,
the transactions contemplated hereby.

          (o) Access. The Administrative Agent shall have been given ongoing
access (subject to requirements under any confidentiality agreements, if
applicable) to the management, records, books of account, contracts, and
properties of Borrower, Guarantors, and their respective subsidiaries and shall
have received such financial, business, legal, and other information regarding
Borrower, Guarantors, and their respective subsidiaries, in each case as the
Administrative Agent and Lenders and their respective counsel shall have
reasonably requested.

          (p) [Reserved.]

          (q) No Default. No Default or Event of Default under this Agreement or
any other Loan Document shall have occurred and be continuing.

          (r) Representations and Warranties. All representations and warranties
in this Agreement or any other Loan Document (including, without limitation, the
Material Adverse Effect and litigation representations) shall be true and
correct in all respects.


                                       16



          (s) Minimum Liquidity. As of the Closing Date, after giving effect to
any Loans made on such date, Borrower and its Subsidiaries shall have Aggregate
Cash On Hand of no less than $750,000,000.

          2.2 Conditions to Subsequent Loans.

          No Term A Lender shall be obligated to make the remaining Term A Loan
requested to be made by it after the Closing Date pursuant to Section 1.1(c)(i)
unless each of the following conditions precedent is satisfied or provided for
in a manner reasonably satisfactory to the Administrative Agent, or duly waived
in writing in accordance with Section 13.2:

          (a) Final Order. The Bankruptcy Court shall have entered the Final
Order no later than 35 days (or such longer period not to exceed 55 days as the
Arrangers shall agree in their sole discretion) after the commencement of the
Cases, certified by the Clerk of the Bankruptcy Court as having been duly
entered, and the Final Order shall be in full force and effect and shall not
have been vacated, reversed, modified, amended or stayed without the prior
written consent of the Administrative Agent, the Arrangers and the Requisite
Lenders.

          (b) Representations and Warranties. All representations and warranties
in this Agreement or any other Loan Document (including, without limitation, the
Material Adverse Effect and litigation representations) shall be true and
correct in all respects.

          (c) No Material Adverse Effect. There has been no Material Adverse
Effect since the date of Borrower's Form 10-Q for the six-month period ended
June 30, 2005 as updated by subsequent public filings prior to September 10,
2005.

          (d) Payment of Fees; Satisfaction of Conditions. Borrower shall have
paid the Fees required to be paid on or prior to such date in the respective
amounts specified in the Fee Letters, and shall have reimbursed the
Administrative Agent and the Arrangers for all fees, costs and expenses of
closing presented as of such date and the other conditions set forth in the Fee
Letters, and the conditions set forth in clauses (i) and (m) of the "Conditions
Precedent to the Closing" section of the GE Capital Commitment Letter, shall
have been satisfied.

          (e) No Default. No Default or Event of Default under this Agreement or
any other Loan Document shall have occurred and be continuing.

          (f) No Violation of Law or Injunction. The consummation of the
transactions contemplated hereby shall not, after giving effect to such
transactions, (i) violate any applicable law, statute, rule or regulation or
(ii) conflict with, or result in a default or event of default under, any
material agreement of Borrower or any of its Subsidiaries entered into or
assumed after the commencement of the Cases, and there shall be in effect no
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of, or imposing adverse conditions on,
the transactions contemplated hereby.

          (g) Post-Petition Skymiles Facility. Each of the Post-Petition
Skymiles Facility Documents shall be in full force and effect, in form and
substance reasonably satisfactory to Administrative Agent.


                                       17



          The acceptance by Borrower of the proceeds of any Loan upon the
request of Borrower shall be deemed to constitute, as of the date thereof, a
representation and warranty by Borrower that the conditions in this Section 2.2
have been satisfied.

3. REPRESENTATIONS AND WARRANTIES

          To induce the Lenders to make the Loans, the Credit Parties executing
this Agreement, jointly and severally, make the following representations and
warranties to the Administrative Agent and each Lender with respect to all
Credit Parties, each and all of which shall survive the execution and delivery
of this Agreement.

          3.1 Corporate Existence; Compliance with Law.

          Each Credit Party (a) is a corporation, limited liability company or
limited partnership duly organized, validly existing and in good standing under
the laws of its respective jurisdiction of incorporation or organization set
forth in Disclosure Schedule 3.1; (b) is duly qualified to conduct business and
is in good standing in each other jurisdiction where its ownership or lease of
property or the conduct of its business requires such qualification, except
where the failure to be so qualified would not result in losses or liabilities
which could reasonably be expected to have a Material Adverse Effect; (c)
subject to the entry by the Bankruptcy Court of the Orders, has the requisite
power and authority to own, pledge, mortgage or otherwise encumber and operate
its properties, to lease the property it operates under lease and to conduct its
business as now conducted or proposed to be conducted; (d) subject to specific
representations regarding Environmental Laws, has all licenses, permits,
consents or approvals from or by, and has made all filings with, and has given
all notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct, except where the failure to
do so would not result in losses or liabilities which could reasonably be
expected to have a Material Adverse Effect; (e) is in compliance with its
charter and bylaws or partnership or operating agreement, as applicable; and (f)
subject to specific representations set forth herein regarding ERISA,
Environmental Laws, tax and other laws, is in compliance with all applicable
provisions of law, except where the failure to comply, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

          3.2 Executive Offices, Collateral Locations, FEIN.

          As of the Closing Date, each Credit Party's name as it appears in
official filings in its state of incorporation or organization, state of
incorporation or organization, organization type, organization number, if any,
issued by its state of incorporation or organization, and the location as of the
Closing Date of each Credit Party's chief executive office, principal place of
business and location and the hangars, terminals, maintenance facilities,
warehouses and premises at which any Collateral is located as of the Closing
Date are set forth in Disclosure Schedule 3.2, and none of such Collateral has
been kept at any location other than the locations listed on Disclosure Schedule
3.2 within four (4) months preceding the Closing Date (or since its acquisition
if less than four (4) months prior to the Closing Date). In addition, Disclosure
Schedule 3.2 lists the federal employer identification number of each Credit
Party as of the Closing Date. Each Credit Party has only one jurisdiction of
existence, incorporation or organization, as applicable.


                                       18



          3.3 Corporate Power, Authorization, Enforceable Obligations.

          Upon the entry by the Bankruptcy Court of the Interim Order (or Final
Order, when applicable), the execution, delivery and performance by each Credit
Party of the Loan Documents to which it is a party and the creation of all Liens
provided for therein: (a) are, subject to the entry of the Orders, are within
such Person's power; (b) have been duly authorized by all necessary corporate,
limited liability company or limited partnership action; (c) subject to the
entry of the Orders, do not contravene any provision of such Person's charter,
bylaws or partnership or operating agreement as applicable; (d) subject to the
entry of the Orders, do not violate any law or regulation, or any order or
decree of any court or Governmental Authority; (e) subject to the entry of the
Orders, do not conflict with or result in the breach or termination of,
constitute a default under or accelerate or permit the acceleration of any
performance required by, any material lease, material agreement or other
material instrument entered into or assumed by such Person after the
commencement of the Cases to which such Person is a party or by which such
Person or any of its property is bound; (f) do not result in the creation or
imposition of any Lien upon any of the property of such Person other than those
in favor of the Administrative Agent for the benefit of the Secured Parties,
pursuant to the Loan Documents and the Orders; and (g) do not require the
consent or approval of any Governmental Authority or any other Person, except
(i) those referred to in Section 2.1(g), all of which will have been duly
obtained, made or complied with prior to the Closing Date and (ii) any consents,
notices or approvals pursuant to the Federal Assignment of Claims Act of 1940 or
any applicable state, county or municipal law restricting the assignment of any
Accounts for which the Account Debtor is the United States government or a
political subdivision thereof or any state, county or municipality or
department, agency or instrumentality thereof. Each of the Loan Documents shall
be duly executed and delivered by each Credit Party that is a party thereto and,
subject to the entry of the Orders, each such Loan Document shall constitute a
legal, valid and binding obligation of such Credit Party enforceable against it
in accordance with its terms.

          3.4 Financial Statements and Projections.

          Except for the Projections, all Financial Statements concerning
Borrower and its Subsidiaries that are referred to below have been prepared in
accordance with GAAP consistently applied throughout the periods covered (except
as disclosed therein and except, with respect to unaudited Financial Statements,
for the absence of footnotes and normal year-end audit adjustments) and present
fairly in all material respects the consolidated financial position of Borrower
and its Subsidiaries as at the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended.

          (a) Financial Statements. The following Financial Statements attached
hereto as Disclosure Schedule 3.4(a) have been delivered on the date hereof:

               (i) The audited consolidated balance sheet at December 31, 2004
of Borrower and its Subsidiaries and the related consolidated statements of
operations, cash flows and shareowners' (deficit) equity for the Fiscal Year
then ended, reported on by Deloitte Touche LLP.


                                       19



               (ii) The unaudited consolidated balance sheet at June 30, 2005 of
Borrower and its Subsidiaries and the related consolidated statements of
operations and cash flows for the six (6) months then ended.

          (b) Projections. The Projections delivered to Lenders prior to the
date hereof have been prepared by Borrower and reflect projections for the
period beginning on August 1, 2005 on a month-by-month basis through December
31, 2007. The Projections are based upon the same accounting principles (other
than adjustments related to the impact of the Cases) as those used in the
preparation of the financial statements described above and are based on
assumptions believed by Borrower to be reasonable at the time such Projections
were delivered in light of conditions and facts known to Borrower as of the date
thereof (it being understood that projections by their nature are inherently
uncertain, the Projections are not a guaranty of future performance, and actual
results may differ materially from the Projections).

          3.5 Material Adverse Effect; Burdensome Restrictions; Default.

          Since the date of Borrower's Form 10-Q for the six-month period ended
June 30, 2005 as updated by subsequent public filings prior to September 10,
2005, (a) no Credit Party has incurred any obligations, contingent or
noncontingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments that are not reflected in the Projections
delivered to Lenders prior to the date hereof and that, alone or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, (b)
no contract, lease or other agreement or instrument has been entered into by any
Credit Party or has become binding upon any Credit Party's assets and no law or
regulation applicable to any Credit Party has been adopted that has or could
reasonably be expected to have a Material Adverse Effect, and (c) no Credit
Party is in default and to the best of Borrower's knowledge no third party is in
default under any material contract, lease or other agreement or instrument,
that alone or in the aggregate could reasonably be expected to have a Material
Adverse Effect. Since the date of Borrower's Form 10-Q for the six-month period
ended June 30, 2005 as updated by subsequent public filings prior to September
10, 2005, no event has occurred, that alone or together with other events, could
reasonably be expected to have a Material Adverse Effect.

          3.6 Ownership of Property; Real Estate; Liens.

          (a) Each Credit Party warrants that it has good, marketable, legal and
valid title to, or legal and valid leasehold interests in, all of its personal
property constituting Collateral.

          (b) As of the Closing Date, the real estate listed in Part 1 of
Disclosure Schedule 3.6 ("Owned Real Estate") constitutes substantially all of
the real property owned by any Credit Party. As of the Closing Date, Borrower
reasonably believes the leases and other agreements listed in Part 2 of
Disclosure Schedule 3.6 constitute all of the Material Real Estate Contracts.
Each Credit Party owns good and marketable fee simple title to all of its Owned
Real Estate. As of the Closing Date, Borrower has valid and enforceable
leasehold interests in all of its material leased real estate, excluding any
leased real estate that is occupied on a month to month or "at will" basis (such
material leased real estate of the Credit Parties, together with the Owned Real
Estate, being herein collectively referred to as "Real Estate"). As of the
Closing


                                       20



Date, there are no purchase options, rights of first refusal or similar
contractual rights that exist with respect to the Owned Real Estate, except as
disclosed in Part 1 of Disclosure Schedule 3.6. As of the Closing Date, true,
correct and complete copies of all Material Real Estate Contracts and leases,
usufructs, use agreements or other occupancy or facility agreements affecting
the Owned Real Estate have been delivered to the Administrative Agent. Part 3 of
Disclosure Schedule 3.6 describes all of the leases, usufructs, use agreements
or other occupancy or facility agreements by a Credit Party for any Owned Real
Estate with respect to which such Credit Party is a landlord as of the Closing
Date. As of the Closing Date, none of the properties and assets of any Credit
Party are subject to any Liens other than Permitted Encumbrances and other Liens
permitted by Section 6.7. As of the Closing Date, no portion of any Credit
Party's Owned Real Estate has suffered any material damage by fire or other
casualty loss since September 10, 2005 that has not heretofore been repaired and
restored in all material respects to its original condition or otherwise
remedied. As of the Closing Date, Borrower reasonably believes all material
permits required to have been issued or appropriate to enable the Owned Real
Estate to be lawfully occupied and used for all of the purposes for which it is
currently occupied and used have been lawfully issued and are in full force and
effect. Since November 30, 2004, there have been no changes or improvements to
the Owned Real Estate that would require a change in any Credit Party's current
certificates of occupancy.

          (c) [Reserved.]

          (d) As of the Closing Date, each Credit Party that is party to the
Spare Parts Mortgage has established and is maintaining reasonable safeguards
against theft of the Spare Parts and the Spare Parts and the Spare Parts are
located at the Designated Spare Parts Location, except to the extent permitted
under the Spare Parts Mortgage.

          3.7 Labor Matters.

          Except as set forth on Disclosure Schedule 3.7: (a) no strikes are
pending against any Credit Party (i) in the United States and (ii) outside of
the United States, except those that, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the operations of such Credit
Party; (b) no other material labor disputes against any Credit Party are pending
or, to any Credit Party's knowledge, threatened, except those that, in the
aggregate, would not reasonably be expected to have a Material Adverse Effect;
(c) hours worked by and payment made to employees of each Credit Party to such
Credit Party's knowledge, comply with the Fair Labor Standards Act and each
other federal, state, local or foreign law applicable to such matters except to
the extent that non-compliance could not reasonably be expected to have a
Material Adverse Effect; (d) as of the Closing Date, no Credit Party is a party
to or bound by any domestic collective bargaining agreement (and true and
complete copies of any agreements described on Disclosure Schedule 3.7 have been
delivered to the Administrative Agent); (e) there is no organizing activity
involving any Credit Party pending or, to any Credit Party's knowledge,
threatened by any labor union or group of employees, except those that, in the
aggregate, would not reasonably be expected to have a Material Adverse Effect;
(f) there are no representation proceedings pending or, to any Credit Party's
knowledge, threatened with the National Mediation Board, and no labor
organization or group of employees of any Credit Party has made a pending demand
for recognition, except those that, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect; and (g) there are no material
complaints or charges


                                       21



against any Credit Party pending or, to any Credit Party's knowledge, threatened
to be filed with any Governmental Authority or arbitrator based on, arising out
of, in connection with, or otherwise relating to the employment or termination
of employment by any Credit Party of any individual, except those that, in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.

          3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness.

          Except as set forth in Disclosure Schedule 3.8, as of the Closing
Date, no Credit Party has any Subsidiaries, is engaged in any joint venture or
partnership with any other Person, or is an Affiliate of any other Person. As of
the Closing Date, all of the issued and outstanding Stock of each Credit Party
is owned by each of the Stockholders and in the amounts set forth in Disclosure
Schedule 3.8. Except as set forth in Disclosure Schedule 3.8, as of the Closing
Date, there are no outstanding rights to purchase, options, warrants or similar
rights or agreements pursuant to which any Credit Party may be required to
issue, sell, repurchase or redeem any of its Stock or other equity securities or
any Stock or other equity securities of its Subsidiaries. All outstanding
Indebtedness and Guaranteed Indebtedness of each Credit Party as of the Closing
Date (except for the Obligations) is described in Section 6.3 (including
Disclosure Schedule 6.3).

          3.9 Government Regulation.

          No Credit Party is required to register as an "investment company" as
such term is defined in the Investment Company Act of 1940. No Credit Party is
subject to regulation under the Public Utility Holding Company Act of 1935 that
restricts or limits its ability to incur Indebtedness or to perform its
obligations hereunder. The making of the Loans by Lenders to Borrower, the
issuance of any Letter of Credit on behalf of Borrower, the application of the
proceeds thereof and repayment thereof will not violate any provision of any
such statute or any rule, regulation or order issued by the Securities and
Exchange Commission.

          3.10 Margin Regulations.

          No Credit Party is engaged, nor will it engage, principally or as one
of its important activities, in the business of extending credit for the purpose
of "purchasing" or "carrying" any "margin stock" as such terms are defined in
Regulation U of the Federal Reserve Board as now and from time to time hereafter
in effect (such securities being referred to herein as "Margin Stock"). None of
the proceeds of the Loans or other extensions of credit under this Agreement
will be used, directly or indirectly, for the purpose of purchasing or carrying
any Margin Stock, for the purpose of reducing or retiring any Indebtedness that
was originally incurred to purchase or carry any Margin Stock or for any other
purpose that might cause any of the Loans or other extensions of credit under
this Agreement to be considered a "purpose credit" within the meaning of
Regulations T, U or X of the Federal Reserve Board.

          3.11 Taxes.

          Except as provided on Disclosure Schedule 3.11, (and except as
otherwise permitted by the Bankruptcy Court and the Bankruptcy Code) all Federal
and other material tax returns, reports and statements, including information
returns, required by any Governmental


                                       22



Authority to be filed by any Credit Party have been filed with the appropriate
Governmental Authority, all such returns, reports and statements are true and
correct in all material respects and, subject to the automatic stay, all Charges
shown to be due and payable on such returns, reports and statements have been or
will be timely paid prior to the date on which any fine, penalty, interest or
late charge may be added thereto for nonpayment thereof, excluding Charges or
other amounts being contested in accordance with Section 5.2(b) and unless the
failure to so file or pay would not be reasonably expected to result in a
Material Adverse Effect. Proper and accurate amounts have been withheld by each
Credit Party from amounts paid to its respective employees for all periods in
full and complete compliance in all material respects with all applicable
federal, state, local and foreign laws and such withholdings have been or will
be timely paid, subject to the automatic stay, to the respective Governmental
Authorities. Except as provided on Disclosure Schedule 3.11, to each Credit
Party's knowledge, as of the Closing Date, none of the Credit Parties and their
respective predecessors are liable for any Charges: (a) under any agreement
(including any tax sharing agreements) or (b) as a transferee. As of the Closing
Date, no Credit Party has agreed or been requested to make any adjustment under
IRC Section 481(a), by reason of a change in accounting method or otherwise,
which would reasonably be expected to have a Material Adverse Effect.

          3.12 ERISA.

          (a) Disclosure Schedule 3.12(a) lists as of the Closing Date, all
Pension Plans, including Title IV Plans, Multiemployer Plans, ESOPs and all
Retiree Welfare Plans. Copies of all such listed Plans, together with a copy of
the latest form IRS/DOL 5500-series for each such Plan have been delivered to
the Administrative Agent. Except with respect to Multiemployer Plans, each
Qualified Plan has been determined by the IRS to qualify under Section 401 of
the IRC, the trusts created thereunder have been determined to be exempt from
tax under the provisions of Section 501 of the IRC and to the knowledge of any
Credit Party, nothing has occurred that would cause the loss of such
qualification or tax-exempt status. To the knowledge of any Credit Party and
except for non-compliance to the extent permitted under the Bankruptcy Code,
each Plan is in compliance in all material respects with the applicable
provisions of ERISA and the IRC. Each Credit Party and all ERISA Affiliates have
made all material contributions and paid all material amounts due as required by
either Section 412 of the IRC or Section 302 of ERISA prior to the date of
commencement of the Cases.

          (b) Except as set forth in Disclosure Schedule 3.12(b) or which would
reasonably be expected not to have a Material Adverse Effect (i) no Title IV
Plan has any material Unfunded Pension Liability; (ii) other than the Cases, no
ERISA Event or event described in Section 4062(e) of ERISA with respect to any
Title IV Plan has occurred or is reasonably expected to occur; (iii) there are
no pending, or to the knowledge of any Credit Party, threatened material claims
(other than claims for benefits in the normal course), sanctions, actions or
lawsuits, asserted or instituted against any Plan or any Person as fiduciary or
sponsor of any Plan; (iv) no Credit Party or ERISA Affiliate has incurred or
reasonably expects to incur any material liability as a result of a complete or
partial withdrawal from a Multiemployer Plan; (v) within the last five years no
Title IV Plan of any Credit Party or ERISA Affiliate has been terminated
pursuant to a "standard termination" as that term is used in Section 4041 of
ERISA, nor has any Title IV Plan of any Credit Party or ERISA Affiliate
(determined at any time within the past five years) with material Unfunded
Pension Liabilities been transferred outside of the


                                       23



"controlled group" (within the meaning of Section 4001(a)(14) of ERISA) of any
Credit Party or ERISA Affiliate; and (vi) except in the case of any ESOP, Stock
of all Credit Parties and their ERISA Affiliates makes up, in the aggregate, no
more than 10% of the fair market value of the assets of any Plan measured on the
basis of fair market value as of the latest valuation date of any Plan.

          3.13 No Litigation.

          Other than the Cases, no unstayed action, claim, lawsuit, demand,
investigation or proceeding is now pending or, to the knowledge of any officer
of such Credit Party, threatened against any Credit Party, before any
Governmental Authority or before any arbitrator or panel of arbitrators
(collectively, "Litigation") that, individually or in the aggregate, (a)
challenges any Credit Party's right or power to enter into or perform any of its
obligations under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder or (b) could
reasonably be expected to have a Material Adverse Effect.

          3.14 Intellectual Property.

          Each Credit Party owns or has rights to use all Intellectual Property
necessary to continue to conduct its business as now conducted by it or
presently proposed to be conducted by it, and each U.S. registered Patent, U.S.
registered Trademark, U.S. registered Copyright and U.S. License in effect on
the Closing Date is listed, together with application or registration numbers,
as applicable, in Disclosure Schedule 3.14. To the knowledge of any Credit
Party, each Credit Party conducts its business and affairs without infringement
of or interference with any Intellectual Property of any other Person in any
material respect and no material claim or litigation regarding any of the
foregoing is pending or threatened. Except as set forth in Disclosure Schedule
3.14, as of the Closing Date, no Credit Party is aware of any infringement claim
by any other Person with respect to any material Intellectual Property.

          3.15 Full Disclosure.

          No information contained in this Agreement, any of the other Loan
Documents, Financial Statements or Collateral Reports or other written reports
from time to time prepared by any Credit Party and delivered hereunder or any
written statement prepared by any Credit Party and furnished by or on behalf of
any Credit Party to the Administrative Agent or Lender pursuant to the terms of
this Agreement (other than any Projections) contains or will contain, when taken
as a whole, any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made
and as of the date when made. Projections from time to time delivered hereunder
are or will be based upon the estimates and assumptions stated therein, all of
which Borrower believed at the time of delivery to be reasonable in light of the
conditions and facts known to Borrower as of such delivery date (it being
understood that projections by their nature are inherently uncertain, such
Projections are not a guaranty of future performance and actual results may
differ materially from those set forth in such Projections).


                                       24



          3.16 Environmental Matters.

          (a) Except as set forth in Disclosure Schedule 3.16 or for any matter
for which notice has been given under Section 5.7, and except for any matter
that would not reasonably be expected to result in any Credit Party incurring
Environmental Liabilities in excess of $500,000 individually or $2,500,000 in
the aggregate in a Fiscal Year, as of the Closing Date: (i) the Owned Real
Estate is free of contamination from any Hazardous Material; (ii) no Credit
Party has caused or suffered to occur any material Release of Hazardous
Materials on, at, in, under, above, to, from or about any of its Real Estate;
(iii) the Credit Parties are and have been in compliance with all Environmental
Laws; (iv) the Credit Parties have obtained, and are in compliance with, all
Environmental Permits required by Environmental Laws for the operations of their
respective businesses as presently conducted or as proposed to be conducted,
which compliance includes obtaining, maintaining and complying with required
Environmental Permits and all such Environmental Permits are valid, uncontested
and in good standing; (v) no Credit Party knows of any existing circumstances or
conditions, including any Releases of Hazardous Materials, which is likely to
result in an Environmental Liability; (vi) there is no unstayed Litigation
arising under or related to any Environmental Laws, Environmental Permits or
Hazardous Material that seeks damages, penalties, fines, costs or expenses or
injunctive relief against, or that alleges criminal misconduct by, any Credit
Party; (vii) no notice has been received by any Credit Party identifying it as a
"potentially responsible party" or requesting information under CERCLA or
analogous state statutes; and (viii) the Credit Parties have provided to the
Administrative Agent copies of all existing environmental reports, reviews and
audits in their possession, custody or control relating to the Owned Real Estate
and material written information pertaining to any Environmental Liabilities of
any Credit Party.

          (b) Each Credit Party hereby acknowledges and agrees that the
Administrative Agent (i) is not now, and has not ever been, in control of any of
the Real Estate or any Credit Party's affairs, and (ii) does not have the
capacity through the provisions of the Loan Documents or otherwise to influence
any Credit Party's conduct with respect to the ownership, operation or
management of any of its Real Estate or compliance with Environmental Laws or
Environmental Permits.

          (c) None of the items set forth on Disclosure Schedule 3.16 either
individually or in the aggregate would be reasonably likely to have a Material
Adverse Effect.

          3.17 Insurance.

          Part 1 of Disclosure Schedule 3.17 lists all insurance policies of any
nature maintained, as of the Closing Date, for current occurrences by each
Credit Party, as well as a summary of the scope and term of each such policy.
Part 2 of Disclosure Schedule 3.17 identifies those insurance policies which
relate to the Collateral.

          3.18 Use of Proceeds.

          The proceeds of the Loans and the Letters of Credit are being used by
Borrower for the refinancing of the obligations under the Existing Credit
Agreement and the Existing


                                       25



Skymiles Facility pursuant to Section 2.1(j) and Section 2.1(k) and general
corporate purposes of the Credit Parties.

          3.19 Deposit.

          Disclosure Schedule 3.19 lists, as of the Closing Date, all banks and
other financial institutions at which any Credit Party maintains deposit or
other accounts in the United States, and such Schedule correctly identifies the
name, address and telephone number of each depository, the name in which the
account is held and the complete account number therefor.

          3.20 Trade Relations.

          As of the Closing Date and except as set forth in Disclosure Schedule
3.20 or resulting directly from the commencement of the Cases, there exists no
actual or, to the knowledge of any Credit Party, threatened termination or
cancellation of, or any material adverse modification or change in the business
relationship (including, without limitation, any code sharing arrangements) of
any Credit Party with any service provider or supplier whose services during the
preceding twelve (12) months caused them to be ranked among the ten largest
service providers or suppliers of the Credit Parties taken as a whole.

          3.21 Compliance With Industry Standards.

          Borrower maintains its Books and Records, Aircraft, Engines, Spare
Parts and other assets and properties that are used in the conduct of its
business in compliance in all material respects with applicable law, including
but not limited to all rules, regulations and standards of the FAA or any other
applicable Aviation Authority.

          3.22 Post-Petition Skymiles Facility.

          All of the Post-Petition Skymiles Facility Documents have been
provided to the Administrative Agent pursuant to Section 2.1(d) and contain all
of the material terms related to the Advance Payment arrangements described
therein as of the Closing Date, other than terms relating generally to Amex's
purchase of Skymiles from Delta set forth in the American Express Co-Branded
Credit Card Program Agreement and the Membership Rewards Agreement, each as
amended and supplemented from time to time, that do not relate to the Advance
Payments (as defined in the Post-Petition Skymiles Facility Documents).

          3.23 Secured, Super-Priority Obligations.

          (a) On and after the Closing Date, the provisions of the Loan
Documents and the Orders are effective to create in favor of the Administrative
Agent, for the benefit of the Secured Parties, legal, valid and perfected Liens
on and security interests (having the priority provided for herein and in the
Orders) in all right, title and interest in the Collateral, enforceable against
each Credit Party that owns an interest in such Collateral.

          (b) Pursuant to subsections 364(c)(2) and (3) of the Bankruptcy Code
and the Orders, all amounts owing by the Borrower under the Loan and by the
Guarantors in respect thereof will be secured by a first priority perfected Lien
on the Collateral, subject only to (i) the


                                       26



Liens of the Skymiles Agent in the Skymiles Collateral pursuant to an order of
the Bankruptcy Court in form and substance satisfactory to the Administrative
Agent, (ii) valid, perfected, nonavoidable and enforceable Liens existing as of
the Petition Date, (iii) valid liens in existence at the commencement of the
Cases to the extent perfected subsequent to such commencement as permitted by
Section 546(b) of the Code (iv) the Carve-Out and (v) Permitted Liens permitted
pursuant to Section 6.7(a), (c), (f), (i), (j) (subject, in the case of Amex, to
the Skymiles Intercreditor Agreement), (n), (o), (q), (r) or (s).

          (c) Pursuant to section 364(c)(i) of the Bankruptcy Code and the
Orders, all obligations of the Borrower and the obligations of the Guarantors
under the Guaranty in respect thereof at all times will constitute allowed
Super-Priority Claim in each of the Cases having priority over all
administrative expenses of the kind specified in sections 503(b) or 507(b) of
the Bankruptcy Code, subject only to the Carve-Out.

          (d) The Orders and the transactions contemplated hereby and thereby,
are in full force and effect and have not been vacated, reversed, modified,
amended or stayed in any manner that affects the rights or duties of the
Administrative Agent, the Arrangers or the Lenders, in each case, without the
prior written consent of the Administrative Agent.

          3.24 Certificated Air Carrier.

          Each Air Carrier is a Certificated Air Carrier and possesses all
necessary certificates, franchises, licenses, permits, rights, designations,
authorizations, exemptions, concessions and consents which are material to the
operation of the routes flown by it and the conduct of its business and
operations as currently conducted (the "Permits"). Neither the DOT nor FAA nor
any other Aviation Authority has taken any action or proposed or, to such Air
Carrier's knowledge, threatened to take any action, to amend, modify, suspend,
revoke, terminate, cancel, or otherwise affect such Permits and Op Specs, in
each case, in an adverse manner.

          3.25 U.S. Citizen.

          Each Air Carrier is a "citizen of the United States" as defined in
Section 40102(a)(15) of Title 49.

          3.26 Spare Parts.

          Set forth on Disclosure Schedule 3.26, is a true, correct and complete
list of each Designated Spare Parts Location as of the Closing Date.

          3.27 Aircraft; Engines.

          Set forth on Disclosure Schedule 3.27 is a true, correct and complete
list of Eligible Aircraft and Eligible Engines as of the Closing Date.


                                       27



          3.28 Slots, Primary Gates and Routes.

          (a) Set forth on Disclosure Schedule 3.28 is a complete and accurate
list, as of the Closing Date, of all Primary Slots and Primary Routes of the
Credit Parties, except those that are licensed for less than one (1) IATA
season. Such Disclosure Schedule 3.28 shall be revised from time to time by
Borrower, or as reasonably requested by the Administrative Agent, to reflect all
Primary Slots and Primary Routes of such Credit Parties. Each such Credit Party,
if applicable, represents and warrants that it holds each of the FAA Slots
pursuant to authority granted by the FAA pursuant to Title 14 of the United
States Code.

          (b) As of the Closing Date, the Credit Parties are utilizing, or
causing to be utilized, in all material respects, the Slots, Primary Gates and
Routes as required by the applicable Governmental Authority, Airport Authority
or Foreign Aviation Authority. As of the Closing Date, except as disclosed in
Borrower's Form 10-K for the Fiscal Year ended December 31, 2004, none of the
Credit Parties has received any notice from any Governmental Authority, Airport
Authority or Foreign Aviation Authority or is aware of any other event or
circumstance, that would be reasonably likely to impair its right to hold and
use Primary Gates, Slots and Routes in any material respect, except that which
would not reasonably be expected to result in a Material Adverse Effect.

4. FINANCIAL STATEMENTS AND INFORMATION

          4.1 Reports and Notices.

          (a) Borrower hereby agrees that from and after the Closing Date and
until the Termination Date, it shall deliver to the Administrative Agent and
Lenders, as required, the Financial Statements, notices, Projections and other
information at the times, to the Persons and in the manner set forth in Annex E.

          (b) Borrower hereby agrees that from and after the Closing Date and
until the Termination Date, it shall deliver to the Administrative Agent and
Lenders, as required, the various Collateral Reports (including Borrowing Base
Certificates in the form of Exhibit 4.1(b)) at the times, to the Persons and in
the manner set forth in Annex F.

          4.2 Communication with Accountants.

          Each Credit Party executing this Agreement authorizes (a) the
Administrative Agent and (b) so long as an Event of Default has occurred and is
continuing, each Lender, to communicate, with prior notice to Borrower and
Borrower's opportunity to be present, directly with its independent registered
public accountants, including Deloitte & Touche LLP, and authorizes and shall
instruct those accountants to communicate to the Administrative Agent and such
Lender, with notice to Borrower, information relating to any Credit Party with
respect to the business, results of operations and financial condition of any
Credit Party as the Administrative Agent or such Lender shall reasonably
request.


                                       28



5. AFFIRMATIVE COVENANTS

          Each Credit Party agrees that from and after the Closing Date and
until the Termination Date:

          5.1 Maintenance of Existence and Conduct of Business.

          Except as otherwise required by the Bankruptcy Code, each Credit Party
shall (a) except as otherwise permitted by Section 6.1 or Section 6.8, do or
cause to be done all things necessary to preserve and keep in full force and
effect its legal existence, all rights, permits, licenses, approvals and
privileges (including all Permits) necessary in the conduct of its business, and
its material rights and franchises entered into or assumed after the
commencement of the Cases, and; (b) at all times maintain, preserve and protect
all of its assets and properties (including all Collateral) used or useful and
necessary in the conduct of its business, and keep the same in good repair,
working order and condition in all material respects (taking into consideration
ordinary wear and tear) and from time to time make, or cause to be made, all
necessary or appropriate repairs, replacements and improvements thereto
consistent with industry practices except as otherwise permitted in the
applicable Loan Documents; and (c) except where failure to do so could not
reasonably be expected to have a Material Adverse Effect, transact business only
in such corporate and trade names as are set forth in Disclosure Schedule 5.1.

          5.2 Payment of Charges.

          (a) Unless payment thereof is precluded by the Cases and subject to
Section 5.2(b), each Credit Party shall pay and discharge or cause to be paid
and discharged promptly all Charges arising after the Petition Date payable by
it, including (i) Charges imposed upon it, its income and profits, or any of its
operations, its property (real, personal or mixed) and all Charges with respect
to tax, social security and unemployment withholding with respect to its
employees, (ii) lawful claims for labor, materials, supplies and services or
otherwise, and (iii) all storage or rental charges payable to warehousemen and
bailees, in each case, before any thereof shall become past due, except in each
case, where the failure to pay or discharge such Charges would not result in
aggregate liabilities in excess of $5,000,000.

          (b) Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges, Taxes or claims described in
Section 5.2(a); provided, that (i) adequate reserves with respect to such
contest are maintained on the books of such Credit Party, in accordance with
GAAP; (ii) no Lien shall be imposed to secure payment of such Charges that is
superior to any of the Liens securing payment of the Obligations and such
contest is maintained and prosecuted continuously and with diligence and
operates to suspend collection or enforcement of such Charges (except where the
failure to pay or discharge such Charges would not result in aggregate
liabilities or Liens in excess of $5,000,000); (iii) none of the Collateral
becomes subject to forfeiture or loss as a result of such contest; and (iv) such
Credit Party shall promptly pay or discharge such contested Charges, Taxes or
claims and all additional charges, interest, penalties and expenses and shall
deliver to the Administrative Agent evidence reasonably acceptable to the
Administrative Agent of such compliance, payment or discharge, if


                                       29



such contest is terminated or discontinued adversely to such Credit Party or the
conditions set forth in this Section 5.2(b) are no longer met.

          (c) Notwithstanding the foregoing, this Section 5.2 shall not be
construed to require Borrower to pay any obligation arising under any agreement
with respect to Section 1110 Assets unless Borrower is approved by the
Bankruptcy Court to make such payment.

          5.3 Books and Records.

          Each Credit Party shall keep adequate Books and Records with respect
to its business activities in which proper entries, reflecting all financial
transactions, are made in accordance with GAAP and on a basis consistent with
the Financial Statements attached as Disclosure Schedule 3.4(a). Upon reasonable
request of the Administrative Agent, each Credit Party shall deliver any
requested Chattel Paper or Instrument to the Administrative Agent (in each case,
accompanied by instruments of transfer executed in blank), and shall, if
requested by the Administrative Agent, mark any Chattel Paper or Instrument that
has not been delivered to the Administrative Agent with a legend that provides
that the writing and the obligations evidenced or secured thereby are subject to
the security interest of the Administrative Agent for the benefit of the Secured
Parties.

          5.4 Insurance; Damage to or Destruction of Collateral. Except as set
forth in the Aircraft Mortgage and the Spare Parts Mortgage with respect to the
Collateral addressed therein:

          (a) The Credit Parties shall, at their sole cost and expense, maintain
insurance at all times against such risks as is customary for companies of the
same or similar size in the same or similar business and industry or as
otherwise required in the Collateral Documents. Such policies of insurance as in
effect on the Closing Date are described, collectively, in Part 1 and Part 2 of
Disclosure Schedule 3.17. Except for policies of insurance relating to
Collateral addressed by the Aircraft Mortgage and the Spare Parts Mortgage, the
policies of insurance (or the loss payable and additional insured endorsements
delivered to the Administrative Agent) described in Part 2 of Disclosure
Schedule 3.17, which lists those policies relating to the Collateral, shall
contain provisions pursuant to which the insurer agrees to provide thirty (30)
days' prior written notice to the Administrative Agent in the event of any
non-renewal, cancellation or material adverse amendment of any such insurance
policy. If any Credit Party at any time or times hereafter shall fail to obtain
or maintain any of the policies of insurance listed in Part 2 of Disclosure
Schedule 3.17 or to pay all premiums relating thereto, the Administrative Agent
may at any time or times thereafter obtain and maintain such policies of
insurance and pay such premiums and take any other action with respect thereto
that the Administrative Agent deem advisable. The Administrative Agent shall
have no obligation to obtain insurance for any Credit Party or pay any premiums
therefor. By doing so, the Administrative Agent shall not be deemed to have
waived any Default or Event of Default arising from any Credit Party's failure
to maintain such insurance or pay any premiums therefor. All sums so disbursed,
including reasonable attorneys' fees, court costs and other charges related
thereto, shall be payable on demand by Borrower to the Administrative Agent and
shall be additional Obligations hereunder secured by the Collateral.


                                       30



          (b) The Administrative Agent reserves the right at any time upon any
change in any Credit Party's risk profile (including any change in the product
mix maintained by any Credit Party or any laws affecting the potential liability
of such Credit Party) to require, upon prior written notice to such Credit
Party, additional forms and limits of insurance, in the Administrative Agent's
reasonable opinion, to adequately protect both the Administrative Agent's and
the Lenders' interests in all or any portion of the Collateral needed to ensure
that each Credit Party is protected by insurance in amounts and with coverage
customary for its industry with respect to such Collateral; such additional
forms and limits of insurance to be obtained and in effect within thirty (30)
days of such written notice. If reasonably requested by the Administrative
Agent, each Credit Party shall deliver to the Administrative Agent from time to
time a report of a reputable insurance broker reasonably satisfactory to the
Administrative Agent, with respect to its insurance policies.

          (c) Borrower on behalf of each Credit Party shall deliver to the
Administrative Agent, in form and substance reasonably satisfactory to the
Administrative Agent, with respect to the insurance policies listed on Part 2 of
Disclosure Schedule 3.17, endorsements to (i) all "All Risk" property and
business interruption insurance naming the Administrative Agent for the benefit
of Secured Parties, as lender loss payee as its interests may appear; provided,
that, with respect to business interruption insurance only, so long as no Event
of Default has occurred or is continuing, the Administrative Agent shall
promptly release to Borrower any insurance proceeds received in connection with
such business interruption insurance, and (ii) all general liability and other
liability policies naming the Administrative Agent for the benefit of Secured
Parties, as an additional insured as its interests may appear. Borrower on
behalf of each Credit Party irrevocably makes, constitutes and appoints the
Administrative Agent (and all officers, employees or agents designated by the
Administrative Agent), so long as the anticipated insurance proceeds exceed
$5,000,000, as Borrower's and each Credit Party's true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claims under
such "All Risk" property policies of insurance, endorsing the name of Borrower
or such Credit Party on any check or other item of payment for the proceeds of
such "All Risk" property policies of insurance and for making all determinations
and decisions with respect to such "All Risk" property policies of insurance.
The Administrative Agent shall have no duty to exercise any rights or powers
granted to them pursuant to the foregoing power-of-attorney. Borrower shall
promptly notify the Administrative Agent of any loss, damage, or destruction to
the Collateral in the amount of $1,000,000 or more, whether or not covered by
insurance. All Net Cash Proceeds from insurance required under the Loan
Documents shall be applied in accordance with Section 1.2.

          (d) Notwithstanding the foregoing, subject to the Orders, where
casualty or condemnation proceeds are required to be applied to the repair or
restoration of the affected property, which does not constitute Collateral
included in the Term A Borrowing Base, or to be delivered to a third party or
deposited in an escrow or similar account, by the express terms of any lease,
usufruct, use agreement or other occupancy or facility agreement to which
Borrower or any Credit Party is a party and that either (i) constitutes a Lien
permitted hereunder having priority over the Administrative Agent's Liens, for
the benefit of Secured Parties or (ii) affects leased real estate or usufruct or
pursuant to the express terms of documents entered into in connection with ARB
Indebtedness, either existing as of the Closing Date or permitted under this
Agreement, then the Administrative Agent's rights under this Agreement with
respect to any


                                       31



casualty or condemnation proceeds or insurance policies required to be
maintained under any such lease, usufruct, use agreement or other occupancy or
facility agreement or other document entered into in connection with such ARB
Indebtedness to which Borrower or any Credit Party is a party shall be subject
to the terms and conditions of such agreement, including without limitation the
settlement of claims, the repair and restoration obligations of Borrower or any
Credit Party and the delivery or deposit of any casualty or condemnation
proceeds for repair or restoration.

          5.5 Compliance with Laws.

          Each Credit Party shall comply with all federal, state, local and
foreign laws and regulations applicable to it, including labor laws, and
Environmental Laws and Environmental Permits, and laws and regulations of any
Aviation Authority applicable to it, except to the extent that the failure to
comply, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect (including, without limitation, as a result of
the loss of any material Permit).

          5.6 Intellectual Property.

          Subject to Section 6.8(i), each Credit Party shall own or have rights
to use all Intellectual Property necessary to continue to conduct its business
as now conducted by it or presently proposed to be conducted by it. Each Credit
Party shall do or cause to be done all things necessary to preserve and keep in
full force and effect at all times all material registered Patents, Trademarks,
trade names, Copyrights and service marks necessary in the conduct of its
business. Each Credit Party shall conduct its business and affairs without
infringement of or interference with any Intellectual Property of any other
Person in any material respect.

          5.7 Environmental Matters.

          Except as otherwise required by the Bankruptcy Code, each Credit Party
shall and shall cause each Person within its control to: (a) conduct its
operations and keep and maintain its Real Estate in compliance with all
Environmental Laws and Environmental Permits other than noncompliance that could
not reasonably be expected to have a Material Adverse Effect; (b) implement any
and all investigation, remediation, removal and response actions that are
necessary to comply in all material respects with Environmental Laws and
Environmental Permits pertaining to the presence, generation, treatment,
storage, use, disposal, transportation or Release of any Hazardous Material on,
at, in, under, above, to, from or about any of its Real Estate; (c) notify the
Administrative Agent promptly after such Credit Party becomes aware of any
violation of Environmental Laws or Environmental Permits or any Release on, at,
in, under, above, to, from or about any Real Estate that is reasonably likely to
result in any Credit Party incurring Environmental Liabilities in excess of
$500,000 individually or $2,500,000 in the aggregate in a Fiscal Year; and (d)
promptly forward to the Administrative Agent a copy of any order, notice,
request for information or any communication or report received by such Credit
Party in connection with any such violation or Release or any other matter
relating to any Environmental Laws or Environmental Permits that could
reasonably be expected to result in any Credit Party incurring Environmental
Liabilities in excess of $500,000 individually or $2,500,000 in the aggregate in
a Fiscal Year. If the Administrative Agent at any time has a


                                       32



reasonable basis to believe that there may be a violation of any Environmental
Laws or Environmental Permits by any Credit Party or any Environmental Liability
arising thereunder, or a Release of Hazardous Materials on, at, in, under,
above, to, from or about any of its Real Estate, that, in each case, could
reasonably be expected to have a Material Adverse Effect, then each Credit Party
shall, upon the Administrative Agent's written request (i) cause the performance
of such environmental audits including subsurface sampling of soil and
groundwater, and preparation of such environmental reports, at Borrower's
expense, as the Administrative Agent may from time to time reasonably request,
which shall be conducted by reputable environmental consulting firms reasonably
acceptable to the Administrative Agent and shall be in form and substance
reasonably acceptable to the Administrative Agent, and (ii) permit the
Administrative Agent or their representatives to have access to all Real Estate
(subject, in the case of leased Real Estate, to the terms of the applicable
lease or other agreement which governs rights of access to leased Real Estate)
for the purpose of conducting such environmental audits and testing as the
Administrative Agent deem appropriate, including subsurface sampling of soil and
groundwater; provided, that the Administrative Agent shall use commercially
reasonable efforts to cause such audits or testing to be conducted in a manner
that does not unreasonably interfere with the operations of the relevant Credit
Party. Borrower shall reimburse the Administrative Agent for the reasonable
costs of such audits and tests and the same will constitute a part of the
Obligations secured hereunder.

          5.8 Landlords' Agreements; Bailee Letters.

          If requested by the Administrative Agent in its reasonable discretion,
each Credit Party shall use commercially reasonable efforts to obtain a
landlord's agreement or bailee letter, as applicable, from the lessor of each
leased property or bailee with respect to any warehouse, processor or converter
facility, maintenance facilities or other location where Collateral with an
aggregate book value in excess of $10,000,000 is stored or located, in each
case, to the extent the Liens and other unstayed rights of the applicable
warehouseman, bailee or lessor are senior to or pari passu with the Liens of the
Administrative Agent (each such location, a "Material Location"), which
agreement or letter shall contain a waiver or subordination of all Liens or
claims that the landlord or bailee may assert against the Collateral at that
location, and shall otherwise be reasonably satisfactory in form and substance
to the Administrative Agent. With respect to each Material Location leased or
owned on or after the Closing Date, if the Administrative Agent has requested
but, within sixty (60) days following such request, has not received a landlord
agreement or bailee letter, Borrower's Eligible Spare Parts, Eligible Ground
Service Equipment and Eligible Tooling at that location shall, in the
Administrative Agent's discretion, be subject to such Reserves as may be
established by the Administrative Agent in its reasonable credit judgment. Each
Credit Party shall timely and fully pay and perform its material obligations
under all leases and other agreements entered into or assumed after the
commencement of the Cases in all respects with respect to Material Locations.

          5.9 [Reserved.]


                                       33



          5.10 Notices.

          Promptly after the sending or filing thereof, Borrower shall send
Administrative Agent copies of all material notices, certificates or reports
delivered pursuant to, or in connection with, any Post-Petition Skymiles
Facility Document.

          5.11 Further Assurances.

          Subject to Section 5.12(b), each Credit Party executing this Agreement
agrees that it shall, at such Credit Party's expense and upon the reasonable
request of the Administrative Agent, duly execute and deliver, or cause to be
duly executed and delivered, to the Administrative Agent such further
instruments and do and cause to be done such further acts as may be necessary or
proper in the reasonable opinion of the Administrative Agent, in accordance with
its customary business practices for comparable debtor in possession
transactions, to carry out more effectively the provisions and purposes of this
Agreement and each Loan Document.

          5.12 Additional Guaranties and Collateral Documents.

          (a) Except as otherwise set forth in the Aircraft Mortgage, to the
extent not delivered to the Administrative Agent on or before the Closing Date
(including in respect of after-acquired property, other than real estate and
interests in real estate that are not Owned Real Estate, and Persons that become
Subsidiaries of any Credit Party after the Closing Date), Borrower agrees
promptly to do, or cause each Subsidiary of Borrower (other than Excluded
Subsidiaries) to do, each of the following, unless otherwise agreed by the
Administrative Agent:

               (i) deliver to the Administrative Agent such duly executed
     supplements and amendments to this Agreement, in each case in form and
     substance reasonably satisfactory to the Administrative Agent and as the
     Administrative Agent reasonably deems necessary in order to ensure that
     each Domestic Subsidiary of Borrower (other than Excluded Subsidiaries),
     guaranties, as primary obligor and not as surety, the full and punctual
     payment when due of the Obligations or any part thereof;

               (ii) deliver to the Administrative Agent such duly executed
     supplements and amendments to any of the Collateral Documents, in each case
     in form and substance reasonably satisfactory to the Administrative Agent
     and as the Administrative Agent reasonably deems necessary in order to (A)
     effectively grant to the Administrative Agent for the benefit of the
     Secured Parties, a valid, perfected and enforceable security interest in
     all assets, personal property or property interests that constitute
     Collateral owned by any Credit Party and (B) effectively grant to the
     Administrative Agent for the benefit of the Secured Parties, a valid,
     perfected and enforceable security interest in all Stock and other debt
     Securities of any Credit Party and each direct Subsidiary of each Credit
     Party (other than the Stock of the Excluded Issuers); provided, however,
     that, in no event shall (x) more than 65% of the outstanding voting Stock
     of any Subsidiary which is not a Domestic Subsidiary be pledged to secure
     the Obligations or (y) the Stock of any joint venture company be pledged to
     the extent that such pledge is restricted by legally binding arrangements
     between the joint venture parties;


                                       34



               (iii) deliver to the Administrative Agent all certificates,
     instruments and other documents representing all Collateral required to be
     pledged and delivered under the Collateral Documents and all other Stock
     and other debt Securities being pledged pursuant to the joinders,
     amendments and supplements executed pursuant to clause (ii) above;

               (iv) to the extent permitted hereunder, if any Credit Party
     acquires a fee simple ownership interest in real estate after the Closing
     Date, or discovers that it owns any fee simple interest in real estate not
     constituting Owned Real Estate, within ninety (90) days thereof, execute
     and deliver to the Administrative Agent, a Mortgage granting the
     Administrative Agent for the benefit of Secured Parties a valid, perfected
     and enforceable first priority Lien on such real estate and, if reasonably
     required by the Administrative Agent, environmental audits, mortgage title
     insurance policy, real property survey, local counsel opinion(s),
     supplemental casualty insurance and flood insurance, and such other
     documents, instruments or agreements reasonably requested by the
     Administrative Agent, in each case, in form and substance reasonably
     satisfactory to the Administrative Agent (it being understood and agreed
     that each such real estate so acquired shall be considered "Owned Real
     Estate" for purposes of this Agreement from and after the date of its
     acquisition);

               (v) if such Subsidiary is party to a Case, to obtain an order of
     the Bankruptcy Court confirming in such Case extension of the terms of the
     Orders to such new Subsidiary as a debtor and debtor in possession;

               (vi) to take such other actions as the Administrative Agent
     reasonably deems necessary to ensure the validity or continuing validity of
     the guaranties required to be given pursuant to clause (i) above or to
     create, maintain or perfect the security interest required to be granted
     pursuant to clause (ii) above, including the filing of financing statements
     or other recordations in such jurisdictions as may be required by the
     Collateral Documents, the Code, the FAA or applicable law, or as may be
     reasonably requested by the Administrative Agent; and

               (vii) if requested by the Administrative Agent, deliver to the
     Administrative Agent legal opinions relating to the matters described above
     in connection with the addition of any Guarantor or Collateral acquired
     after the date hereof, which opinions shall be in form and substance
     consistent with those delivered on the Closing Date and from counsel
     reasonably satisfactory to the Administrative Agent.

          (b) Notwithstanding the foregoing, (i) prior to the occurrence of any
Event of Default, the Administrative Agent shall not take any security interest
in or require any actions to be taken with respect to (A) those assets as to
which the Administrative Agent shall determine, in their reasonable discretion,
that the cost of obtaining such security interest or taking such action are
excessive in relation to the benefit to Lenders afforded thereby, (B) property
the acquisition or construction of which was financed through Indebtedness
(existing as of the Closing Date (other than Gates) or as permitted by Section
6.3(a)), and (C) any property to the extent that the granting of such a security
interest would constitute a breach or violation of a valid and effective
restriction in favor of a third party (including, without limitation, mandatory
consent rights), that


                                       35



would result in the termination of any Credit Party's interest in such
Collateral or give rise to any indemnification obligations or any right to
terminate or commence the exercise of remedies under such restrictions, (ii) the
Administrative Agent shall not take any security interest in, or require any
Credit Party to take any action referred to in Section 5.12(a)(iv) with respect
to, real estate, or require the execution or delivery of any Aircraft Mortgage
or Spare Parts Mortgage, or require any Credit Party to take any actions with
respect to the FAA relating to any of the 737-800 aircraft described in Section
6.8(m) hereof or with respect to any asset (A) until the expiration of 90 days
after the date of acquisition thereof, unless Borrower shall have given the
Administrative Agent notice that it does not intend to finance such acquisition
as permitted by Section 6.3(a)(i), and (B) previously securing or financed by
Existing Secured Indebtedness until the expiration of 90 days after such
Existing Secured Indebtedness has been repaid, unless Borrower shall have given
the Administrative Agent notice that it does not intend to finance such asset as
permitted by Section 6.3(a)(v), and (iii) Liens required to be granted and
actions required to be taken pursuant to this Section 5.12 shall all be subject
to exceptions and limitations (including Liens permitted pursuant to Section
6.7) consistent with those set forth herein and in the Collateral Documents as
in effect on the Closing Date.

          5.13 Pledged Spare Parts.

          Each Credit Party shall segregate all of its Pledged Spare Parts from
any Spare Parts which are subject to any consignment arrangement, and shall keep
all Spare Parts not so subject to a consignment arrangement in Designated Spare
Parts Locations, except to the extent permitted in the Spare Parts Mortgage. The
Pledged Spare Parts will be maintained by or on behalf of the Air Carriers that
are Credit Parties, as required by the Spare Parts Mortgage.

          5.14 Aircraft Mortgage; Spare Parts Mortgage; SGR Security Agreement.

          Each Air Carrier that is a Credit Party shall execute the Aircraft
Mortgage, the Spare Parts Mortgage and the SGR Security Agreement.

          5.15 Slot Utilization.

          (a) Subject to transfers, exchanges and other dispositions permitted
by this Agreement and the SGR Security Agreement, from and after the Closing
Date Borrower shall cause the FAA Slots to have sufficient Slot Utilization, for
purposes of 14 C.F.R. 93.227 (the "Slot Utilization Regulations") and shall at
the end of Week 4 of any respective Two-Month FAA Reporting Period for FAA Slots
present to each Administrative Agent (i) if, during Week 1, Week 2, Week 3 or
Week 4, the FAA or any applicable Foreign Aviation Authority has revoked,
terminated or canceled any Credit Parties' right to utilize any Primary Slot, a
list of all such Primary Slots and (ii) a certification from Borrower that
either:

               (i) the FAA Slots have been utilized at the following rates (a
     week shall be deemed to be seven (7) days for purposes of this Section
     5.14): (x) sixty-five percent (65%) for each hourly period for Weeks 1-4 of
     the respective Two-Month FAA Reporting Period for Slots in DCA and LGA; (y)
     sixty-five percent (65%) for each half


                                       36



     hour period for Weeks 1-4 of the respective Two-Month FAA Reporting Period
     for arrival Slots in DCA and LGA; or

               (ii) Borrower intends to effectuate full compliance with all of
     the slot utilization covenants pursuant to exchanging slots at such
     airports with third party air carriers and such officer has no reason to
     believe that Borrower will fail to comply with the Slot Utilization
     Regulations.

          (b) Subject to transfers, exchanges and other dispositions permitted
by this Agreement and the SGR Security Agreement, utilize the Foreign Slots in a
manner consistent in all material respects with applicable regulations and
contracts in order reasonably to preserve its right to hold and operate the
Foreign Slots, taking into account any waivers or other relief granted by any
applicable Aviation Authority.

          5.16 ERISA/Labor Matters.

          Borrower shall furnish the Administrative Agent (with sufficient
copies for each of Lenders) each of the following:

          (a) promptly and in any event within thirty (30) days of filing or
receipt by Borrower, with respect to any Title IV Plan, copies of the most
recent annual reports or returns (IRS Form 5500), audited or unaudited financial
statements and actuarial valuations with respect to such Plans;

          (b) promptly and in any event within ten (10) days after Borrower, any
Subsidiary of Borrower or any ERISA Affiliate knows or has reason to know that a
request for a minimum funding waiver under Section 412 of the Code has been
filed with respect to any Title IV Plan or Multiemployer Plan, a written
statement of an officer of Borrower describing such waiver request and the
action, if any, Borrower, its Subsidiaries and ERISA Affiliates propose to take
with respect thereto and a copy of any notice filed with the PBGC or the IRS
pertaining thereto;

          (c) simultaneously with the date that Borrower, any Subsidiary of
Borrower or any ERISA Affiliate files a notice of intent to terminate any Title
IV Plan, a copy of each notice;

          (d) promptly and in any event within three (3) days after Borrower,
any Subsidiary of Borrower or any ERISA Affiliate receives any adverse
communication from a Governmental Authority which could result in an increase to
or accelerate the payment of any liability with respect to a Pension Plan, a
copy of such notice; and

          (e) simultaneously with the date that any Credit Party (i) commences
or terminates negotiations with any collective bargaining agent for the purpose
of materially changing any collective bargaining agreement; (ii) reaches an
agreement with any collective bargaining agent prior to ratification for the
purpose of materially changing any collective bargaining agreement; (iii)
ratifies any agreement reached with a collective bargaining agent for the
purpose of materially changing any collective bargaining agreement; or (iv)
becomes subject to a "cooling off period" under the auspices of the National
Mediation Board, notification of the


                                       37



commencement or termination of such negotiations, a copy of such agreement or
notice of such ratification or a "cooling off period," as the case may be.

          5.17 Maintenance of Liens and Collateral.

          Each Credit Party, subject to Section 5.12, shall do or cause to be
done all things necessary to preserve and keep in full force and effect at all
times the Liens securing the Obligations as provided in the Loan Documents.

          5.18 Use of Proceeds.

          The proceeds of the Loans and the Letters of Credit will be used by
Borrower solely for the refinancing of the obligations under the Existing Credit
Agreement and the Existing Skymiles Facility pursuant to Section 2.1(j) and
Section 2.1(k) and for the general corporate purposes of the Credit Parties.

          5.19 Cash Management Systems.

          Borrower will, subject to the entry of the applicable First Day
Orders, establish and will maintain until the Termination Date, the Cash
Management Systems as described in Annex C.

          5.20 Appraisals.

          Each Credit Party shall provide the Administrative Agent access to its
properties and to the Collateral in accordance with Section 1.12 and permit the
Administrative Agent to have an Appraiser conduct appraisals as set forth in
Annex F.

          5.21 Post-Closing Covenants. Borrower shall comply with the terms and
conditions set forth on Annex L.

6. NEGATIVE COVENANTS

          Each Credit Party agrees that from and after the Closing Date until
the Termination Date:

          6.1 Mergers, Subsidiaries, Etc.

          No Delta Company shall directly or indirectly, by operation of law or
otherwise, merge or consolidate with any Person or acquire Stock of any Person;
provided, that (a) any Subsidiary may merge or consolidate with (i) Borrower or
a Guarantor in a transaction in which Borrower or any Guarantor is the surviving
Person and (ii) if such Subsidiary is not a Guarantor, any other Delta Company,
(b) Borrower may merge or consolidate with, or acquire Stock of, any Person to
effectuate an Investment permitted by Section 6.2 in a transaction in which
Borrower is the surviving Person, (c) any Subsidiary may merge or consolidate
with, or acquire Stock of, any Person to effectuate an Investment permitted by
Section 6.2 in a transaction in which a Subsidiary is the surviving Person and
(d) any Subsidiary may merge or consolidate with another Person in connection
with any sale or other disposition of such Subsidiary permitted pursuant to


                                       38



Section 6.8; provided, that such merger, consolidation or acquisition shall not
result in the acquisition of Stock located outside of the United States in an
amount in excess of $25,000,000 in the aggregate.

          6.2 Investments; Loans and Advances.

          Except as otherwise expressly permitted by this Section 6.2, no Delta
Company shall make or permit to exist any investment in, or make, accrue or
permit to exist loans or advances of money to, any Person, through the direct or
indirect lending of money, holding of securities or otherwise (all of the
foregoing, "Investments"), except (without duplication):

          (a) each Delta Company may hold Investments comprised of notes
payable, or stock or other securities issued by Account Debtors to such Delta
Company pursuant to negotiated agreements with respect to settlement of such
Account Debtor's Accounts in the ordinary course of business, consistent with
past practices;

          (b) each Delta Company may maintain its existing investments in its
Subsidiaries as of the Closing Date summarized on Disclosure Schedule 3.8;

          (c) each Delta Company may make investments, subject to Section 5.19,
in Permitted Investments;

          (d) each Delta Company may maintain its existing Investments
summarized on Disclosure Schedule 6.2;

          (e) Investments (i) may be made by any Credit Party in any other
Credit Party, (ii) may be made by any Delta Company that is not a Credit Party
in any other Delta Company, subject to compliance with Section 6.3(a)(vii) and
(iii) constituting capital contributions or intercompany loans or advances may
be made to Aero Assurance, Ltd. or New Sky, Ltd. for the purpose of cash
collateralizing letters of credit issued for the account of such captive
insurance Subsidiaries to the extent permitted under Section 6.3(a)(xiii);

          (f) each Delta Company may make Investments with the funds held in the
Excluded Accounts;

          (g) each Delta Company may make Investments consisting of (i) currency
swap agreements, currency future or option contracts and other similar
agreements designed to hedge against fluctuations in foreign interest rates and
currency values, (ii) interest rate swap, cap or collar agreements and interest
rate future or option contracts, and (iii) fuel hedges and other derivatives
contracts, in each case, to the extent that such agreement or contract is
permitted by Section 6.3 and Section 6.17 and entered into in the ordinary
course of business;

          (h) the Delta Companies, in the aggregate, may make Investments in an
amount not to exceed $10,000,000 outstanding at any time in travel or airline
related businesses made in connection with marketing and promotion agreements,
alliance agreements, distribution agreements, agreements with respect to fuel
consortiums, agreements relating to flight training, agreements relating to
insurance arrangements, agreements relating to parts management systems and
other similar agreements;


                                       39



          (i) the Delta Companies may make advances to their respective
officers, directors and employees in an amount not to exceed (i) $10,000
outstanding at any time to any individual officer, director or employee and (ii)
$7,000,000 in the aggregate outstanding at any time for all such advances;

          (j) the Delta Companies may make advances in respect of (i) signing
bonuses for newly hired officers, directors or employees of any Delta Company in
an amount not to exceed $250,000 individually outstanding at any time and (ii)
relocation expenses for newly hired officers, directors or employees of any
Delta Company in an amount not to exceed $5,000,000 in the aggregate outstanding
at any time;

          (k) the Delta Companies may make Investments in the form of foreign
cash equivalents in the ordinary course of business and consistent with past
practices;

          (l) [Reserved];

          (m) the Delta Companies may make additional Investments in
Subsidiaries that are not Credit Parties in an aggregate amount at any one time
not to exceed $5,000,000;

          (n) the Delta Companies may make any Investment consisting of the
acquisition of Stock of any Person; provided that (i) such Person becomes a
Credit Party or is merged with or into Borrower or a Credit Party immediately
upon consummation of such acquisition and (ii) such acquisition is permitted by
Section 6.10;

          (o) the Delta Companies may make any Investment consisting of the
acquisition of equity interests permitted pursuant to Section 6.13(d), (e) and
(f); and

          (p) the Delta Companies may make other Investments in an aggregate
amount at any one time not to exceed $25,000,000 for all Investments made
pursuant to this clause (p).

The term "Investments" shall not include deposits to secure the performance of
leases.

          6.3 Indebtedness.

          (a) No Delta Company shall create, incur, assume or permit to exist
any Indebtedness, except (without duplication):

               (i) Indebtedness secured by purchase money security interests and
Capital Leases (including in the form of sale-leaseback, synthetic lease or
similar transactions) to the extent such Indebtedness was incurred to finance
the acquisition or construction of aircraft, equipment and real estate to the
extent permitted by Section 6.10 or ARB Indebtedness; provided, that the amount
of such Indebtedness does not exceed 100% of the purchase price or construction
cost (including any capitalized interest and issuance fees) of the subject
asset;

               (ii) the Loans and the other Obligations;

               (iii) [Reserved];


                                       40



               (iv) existing Indebtedness described in Disclosure Schedule
3.12(b) or 6.3;

               (v) Indebtedness incurred after the Closing Date; provided, that
(A) such indebtedness is (x) secured by (or finances) assets which, as of the
Closing Date, secured (or was financed by) other Indebtedness outstanding on the
Closing Date described in Disclosure Schedule 6.3 (the "Existing Secured
Indebtedness"), (y) incurred within one hundred eighty (180) days after the
repayment in full of such Existing Secured Indebtedness and (z) is in an
aggregate principal amount not exceeding the maximum principal amount of such
Existing Secured Indebtedness outstanding at any time on or prior to the Closing
Date and (B) such Existing Secured Indebtedness shall have been repaid in full
on the scheduled maturity date thereof (a "Permitted Secured Financing");

               (vi) Indebtedness under the Post-Petition Skymiles Facility in an
aggregate principal amount not to exceed $350,000,000;

               (vii) Indebtedness consisting of intercompany loans and advances
made (A) among Credit Parties, (B) among Delta Companies that are not Credit
Parties and (C) by a Credit Party to Aero Assurance, Ltd. or New Sky Ltd.
permitted pursuant to Section 6.2(e)(iii), provided, that (A) to the extent any
such loan or advance is evidenced by a promissory note (the "Intercompany
Notes") held by any Credit Party, the applicable Credit Party shall have pledged
and delivered such note to the Administrative Agent pursuant to the applicable
Collateral Document as additional collateral security for the Obligations, (B)
each applicable Credit Party shall record all intercompany transactions on its
Books and Records in the ordinary course of business and (C) the obligations of
any Credit Party under any such intercompany loans to any other Delta Company
shall be subordinated to the Obligations of such Credit Party under the Loan
Documents in a manner reasonably satisfactory to the Administrative Agent;

               (viii) Indebtedness owed to any Lender (or any of its affiliates)
or any other Person in connection with Investments permitted under Section
6.2(g) and Section 6.17;

               (ix) Indebtedness in respect of any overdrafts and related
liabilities arising from treasury, depository and cash management services or in
connection with any automated clearing house transfers of funds (but subject to
compliance with Section 5.19);

               (x) Indebtedness consisting of take-or-pay obligations contained
in supply agreements entered into in the ordinary course of business and
consistent with past practices;

               (xi) Indebtedness to credit card processors in connection with
credit card processing services incurred in the ordinary course of business and
consistent with past practices;

               (xii) Indebtedness owing by the Credit Parties to Citibank, N.A.
and its banking Affiliates, arising in the ordinary course of business,
providing netting


                                       41



services with respect to intercompany Indebtedness permitted to be incurred and
outstanding pursuant to this Agreement so long as such Indebtedness does not
remain outstanding for more than three (3) Business Days from the date of its
incurrence and does not exceed an aggregate outstanding amount of $50,000,000;

               (xiii) Indebtedness in respect of letters of credit in an
aggregate outstanding amount not to exceed $150,000,000;

               (xiv) surety bonds in an aggregate outstanding amount not to
exceed $80,000,000;

               (xv) other unsecured Indebtedness incurred subsequent to the
Closing Date; provided, that no principal payments shall be required thereunder
(except upon acceleration) on or prior to the Scheduled Maturity Date;

               (xvi) Permitted Subordinated Indebtedness;

               (xvii) Indebtedness constituting a Permitted Refinancing of
Indebtedness referred to in clauses (i), (iv), (v), (vi) or (xvi) above;

               (xviii) unsecured Indebtedness (including letters of credit)
incurred subsequent to the Closing Date to provide credit support for (x)
obligations arising in the ordinary course of business and consistent with past
practices in connection with credit card processing services and (y) the
Indebtedness described in clause (ix) above;

               (xix) other unsecured Indebtedness incurred subsequent to the
Closing Date in an aggregate amount not to exceed $25,000,000 outstanding at any
time; and

               (xx) refinancings, replacements and restructurings of
Indebtedness secured directly or indirectly by "equipment" described in Section
1110(a)(3) of the Bankruptcy Code (as in effect on the Filing Date hereof and
permitted by Section 6.03(a)(iv)) or by any equipment that would have qualified
as such equipment had it been placed in service after October 22, 1994
(collectively, "Section 1110-Type Indebtedness"); provided, that (A) the
principal amount of such existing Indebtedness shall not be increased above the
principal amount thereof outstanding immediately prior to such refinancing or
replacement, unless (1) the interest expense, if any, on any scheduled payments
deferred as a result of such refinancing is not paid currently but is
recapitalized as principal or (2) such refinancing increases the principal
amount of such refinanced Section 1110-Type Indebtedness but the overall effect
on the aggregate amount of existing Indebtedness secured directly or indirectly
by "equipment" described in Section 1110(a)(3) of the Bankruptcy Code is reduced
or remains the same, or the financing expenses in connection with all such
Indebtedness is reduced (it being understood that any such increase in
Indebtedness may not be granted Super-Priority Claim status pursuant to Section
364(c)(1) of the Bankruptcy Code), (B) after giving effect thereto, the average
maturity of all the then-outstanding Section 1110-Type Indebtedness shall not be
shortened as a result of such refinancing or replacement, (C) the


                                       42



weighted average life to maturity of all such existing Section 1110-Type
Indebtedness shall not be reduced as a result of such refinancing, replacement
or restructuring, and (D) the direct and contingent obligors therefor shall not
be changed, as a result of or connection with such refinancing or replacement.

          (b) No Credit Party shall, directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount in respect of any post-petition Indebtedness prior to its
scheduled maturity, other than (i) the Obligations; (ii) Indebtedness secured by
a Lien permitted under Section 6.7 if the asset securing such Indebtedness on a
first-priority basis has been sold or otherwise disposed of in accordance with
Section 6.8; (iii) Indebtedness upon any Permitted Refinancing; (iv) other
Indebtedness (excluding Permitted Subordinated Indebtedness) not in excess of
$10,000,000; (v) Indebtedness incurred subsequent to the Closing Date permitted
under Section 6.3(a) other than Indebtedness permitted under Section
6.3(a)(iii), (iv), (vi), (xv), (xvi) or any Permitted Refinancing of
Indebtedness permitted by any of the foregoing; (v) as otherwise permitted in
Section 6.13; and (vi) ARB Indebtedness in order to minimize, in Borrower's
reasonable judgment upon opinion of counsel, such Credit Party's potential
liability arising from a loss of the tax exempt status of such Indebtedness.

          6.4 Affiliate Transactions.

          None of the Credit Parties will sell or transfer any property or
assets to, or otherwise engage in any other material transactions with, any of
its Affiliates (other than the other Credit Parties), except transactions (a) at
prices and on terms and conditions no less favorable to such Credit Party than
could be obtained on an arm's length basis from unrelated third parties, (b)
reasonable and customary fees and compensation paid to, and indemnity provided
on behalf of, officers, directors or employees of such Credit Party and other
transactions permitted by Section 6.2(i) and (j), (c) any dividends, other
distributions or payments permitted by Section 6.13, (d) any Investment in a
Delta Company permitted by Section 6.2 or intercompany transactions with a Delta
Company permitted by Section 6.3, (e) and (e) provision of legal, accounting or
administrative services to any Delta Company in the ordinary course of business
in accordance with past practices.

          6.5 Capital Structure and Business.

          No Credit Party shall amend its charter or bylaws in a manner that
would adversely affect the Administrative Agent or Lenders, or such Credit
Party's duty or ability to repay the Obligations, in any material respect. No
Credit Party shall engage in any business other than the businesses currently
engaged in by it and businesses that are reasonably related thereto.

          6.6 Guaranteed Indebtedness.

          No Credit Party shall create, incur, assume or permit to exist any
Guaranteed Indebtedness, except (without duplication) (a) by endorsement of
instruments or items of payment for deposit to the general account of any Credit
Party in the ordinary course of business, (b) Guaranteed Indebtedness incurred
for the benefit of any other Credit Party if the primary


                                       43



obligation is expressly permitted by this Agreement, (c) Guaranteed Indebtedness
to the extent constituting Indebtedness permitted by Section 6.3 and (d) to the
extent existing on the Closing Date as set forth in Disclosure Schedule 6.3.

          6.7 Liens.

          No Credit Party shall create, incur, assume or permit to exist any
Lien on or with respect to the Collateral or any of its other properties or
assets (whether now owned or hereafter acquired), except for:

          (a) Permitted Encumbrances;

          (b) Liens in existence on the date hereof and summarized on Disclosure
Schedule 6.7;

          (c) Liens created after the date hereof by conditional sale or other
title retention agreements (including Capital Leases) or in connection with
purchase money Indebtedness, in each case, permitted in Section 6.3(a)(i);
provided, that such Liens attach only to the assets (including related leases
and subleases thereof and other assets integral to the use thereof including
security deposits from any sublessee collaterally assigned for the benefit of
lessors) subject to such purchase money debt and such Indebtedness is incurred
within one hundred eighty (180) days following such purchase and does not exceed
100% of the purchase price of the subject assets;

          (d) Liens (having the priority set forth in the Skymiles Intercreditor
Agreement) securing the "Obligations" as defined in the Post-Petition Skymiles
Facility Documents, so long as the Skymiles Intercreditor Agreement is in full
force and effect;

          (e) [Reserved];

          (f) Liens on assets that are the subject of a Permitted Secured
Financing; provided, that such Liens attach only to the assets subject to the
Existing Secured Indebtedness related thereto;

          (g) other Liens securing Indebtedness permitted by Section 6.3(a)(ix)
and (xii);

          (h) Liens on the Excluded Accounts and amounts on deposit therein in
favor of the beneficiaries of the amounts on deposit therein to the extent such
Liens secure obligations owed to such beneficiaries;

          (i) any interest or title of a licensor, lessor or sublessor granted
to others, but only to the extent permitted by any of the Collateral Documents;

          (j) Liens in favor of credit card processors securing obligations in
connection with credit card processing services incurred in the ordinary course
of business and consistent with past practices;


                                       44



          (k) Liens on cash deposits that do not constitute Collateral in an
aggregate amount not in excess of $150,000,000;

          (l) [Reserved.]

          (m) Liens on Margin Stock, if and to the extent the value of all
Margin Stock of Borrower and its Subsidiaries exceeds 25% of the total assets
subject to this Section 6.7;

          (n) Liens on real and personal property acquired in connection with
acquisitions permitted by this Article 6 to the extent such Liens exist on such
acquired property at the time of acquisition; provided, that such Liens attach
only to the assets (including related leases thereof and, in the case of
personal property, other assets integral to the use thereof including security
deposits from any sublessee collaterally assigned for the benefit of lessors)
subject to such acquisition;

          (o) Liens securing a Permitted Refinancing of Indebtedness, to the
extent such Indebtedness being refinanced was originally secured in accordance
with this Section 6.7; provided that such Lien does not attach to any additional
property or assets of Borrower or any Subsidiary;

          (p) Liens securing the Loans and the other Obligations;

          (q) any Lien on any Non-1110 Aviation Assets or Section 1110 Assets
securing Indebtedness permitted under Section 6.3(a)(xx); provided, that such
Liens attach only to the assets securing the applicable Indebtedness permitted
under Section 6.3(a)(iv);

          (r) Liens created after the Closing Date in connection with operating
Leases; provided, that such Liens attach only to the assets subject to such
Lease (including any sublease thereof, other assets integral to the use thereof
and security deposits from any sublessee collaterally assigned for the benefit
of lessors); and

          (s) other Liens so long as the value of the property subject to such
Liens, and the Indebtedness and other obligations secured thereby, do not
exceed, in the aggregate, $2,000,000.

          No Credit Party shall grant, or permit any of its Subsidiaries to
grant, except as expressly permitted by this Agreement, any Lien on any of its
respective assets securing the Senior Claims or the Junior Claims (as each such
term is defined in the Skymiles Intercreditor Agreement), as the case may be, to
any Person other than each of the Administrative Agent and the Skymiles Agent
(as defined in the Skymiles Intercreditor Agreement) on behalf of the applicable
Secured Parties (as defined in the Skymiles Intercreditor Agreement), subject to
the relative priorities set forth in the Skymiles Intercreditor Agreement.

          6.8 Sale of Stock and Assets.

          No Credit Party shall sell, transfer, convey, assign or otherwise
dispose of any of its properties or other assets, including the Stock of any of
its Subsidiaries (whether in a public or


                                       45



a private offering or otherwise) or any of its Accounts (any such disposition
being an "Asset Sale"), other than (without duplication):

          (a) sales and other dispositions of assets (excluding those assets
subject to clause (c) or (i) below), and swaps, exchanges, interchange or
pooling of assets (subject to the limitations set forth in the Collateral
Documents), in the ordinary course of business;

          (b) sales or dispositions of surplus, obsolete, negligible or
uneconomical assets no longer used in the business of Borrower and the
Guarantors;

          (c) the sale or other disposition of any Collateral consisting of (i)
up to fifteen (15) 767-200 aircraft or (ii) other Collateral included in the
Term A Borrowing Base having a book value not exceeding $50,000,000 in the
aggregate in any Fiscal Year; provided, that, in each case, any disposition of
any such Collateral included in the Term A Borrowing Base (other than DFW
Assets) may only be sold for value in excess of the Allocated Amount for such
Collateral;

          (d) Excluded Sales;

          (e) all sales of assets of DLMS securing its obligations under the
Skymiles Facility;

          (f) dispositions of Section 1110 Assets, consisting of the return
thereof to the party that had provided financing therefor; provided, that such
dispositions, in the aggregate, shall not materially and adversely affect the
operations of the Delta Companies, taken as a whole;

          (g) sales or dispositions of assets among (i) Borrower and the
Guarantors or (ii) Subsidiaries that are not Guarantors;

          (h) sales or dispositions of other assets in arm's length transactions
at fair market value in an aggregate amount not to exceed $50,000,000 in the
aggregate in any Fiscal Year;

          (i) (i) abandonment of Intellectual Property constituting Collateral;
provided, that such abandonment is (A) in the ordinary course of business
consistent with past practices and (B) with respect to Intellectual Property
that is not material to the business of Borrower and the Guarantors and (ii)
licensing or sublicensing of Intellectual Property constituting Collateral in
the ordinary course of business consistent with past practices;

          (j) dispositions of assets located outside of the United States in an
aggregate amount not to exceed $5,000,000;

          (k) the sale or discount of Accounts to a collection agency in
connection with collections of delinquent receivables;

          (l) (i) abandonment of Slots, Gates, Routes or Supporting Route
Facilities; provided, that such abandonment is (A) in connection with the
downsizing of any hub or other


                                       46



facility located in Cincinnati as reflected in the Projections, (B) in
connection with the downsizing of any other hub or facility as reflected in the
Projections, which does not materially and adversely affect the business of
Borrower and the Guarantors, taken as a whole, or (C) in the ordinary course of
business consistent with past practices and does not materially and adversely
affect the business of Borrower and the Guarantors, taken as a whole, (ii)
transfer or other disposition of Slots to the extent permitted by Section 7(b)
of the SGR Security Agreement in an aggregate amount not to exceed $25,000,000,
(iii) exchange of Slots to the extent permitted by Section 7(c) of the SGR
Security Agreement and (iv) assignments of leases or granting of leases of (x)
Aircraft or Engines to the extent permitted pursuant to the Aircraft Mortgage
and (y) other aircraft or engines (that do not constitute Collateral) in the
ordinary course of business;

          (m) the sale or other disposition of any 737-800 aircraft
substantially concurrently with the consummation of the purchase of such
aircraft to the extent such purchase occurs pursuant to a purchase agreement to
which a Delta Company is a party as of the Closing Date;

          (n) sale-leaseback, synthetic lease or similar transactions to the
extent permitted under Section 6.3(a)(i) and Section 6.10 and sale-leasebacks of
Section 1110 Assets and Non-1110 Aviation Assets;

          (o) to the extent not prohibited by Section 6.18 or any of the
Collateral Documents, the disposition of leasehold or similar interests in
non-Owned Real Estate, including through assignment, sublease or lease
termination or rejection, in whole or in part, or the return, surrender,
exchange or abandonment of any property subject thereto;

          (p) any sale of Margin Stock for fair value as determined in good
faith by Borrower; and

          (q) any Property Loss Event (without giving effect to the thresholds
set forth in the definition thereof);

          (r) rejection of executory contracts in accordance with an order of
the Bankruptcy Court to the extent such rejections do not, individually or in
the aggregate, materially and adversely affect the business of Borrower and the
Guarantors, taken as a whole; and

          (s) sale of Excluded Properties; provided, that, if such Excluded
Properties are included in the Term A Borrowing Base, the sale price shall be in
excess of the Allocated Amount for such Excluded Properties.

          6.9 [Reserved.]

          6.10 Financial Covenants.

          Borrower shall not breach or fail to comply with any of the Financial
Covenants.


                                       47



          6.11 Hazardous Materials.

          No Credit Party shall cause or knowingly permit a Release of any
Hazardous Material on, at, in, under, above, to, from or about any of the Real
Estate where such Release would (a) violate in any respect, or form the basis
for any Environmental Liabilities under, any Environmental Laws or Environmental
Permits or (b) otherwise adversely impact the value or marketability of any of
the Real Estate or any of the Collateral, other than in the case of each of
clauses (a) and (b), such violations, Releases or Environmental Liabilities that
could not reasonably be expected to have a Material Adverse Effect.

          6.12 Sale-Leasebacks.

          No Credit Party shall engage in any sale-leaseback, synthetic lease or
similar transaction involving any of its assets (including without limitation,
any aircraft) unless permitted by Section 6.3(a)(i) or Section 6.8(n).

          6.13 Restricted Payments.

          No Credit Party shall make any Restricted Payment, except (a) payments
of principal of and interest on intercompany loans and advances between Borrower
and Guarantors to the extent permitted by Section 6.3, (b) dividends and
distributions by Subsidiaries of Borrower, (c) dividends and distributions by
Borrower with respect to its Stock payable solely in additional shares of its
common Stock, (d) pursuant to stock option plans or other benefit plans for
management or employees of Borrower and its Subsidiaries in a maximum aggregate
amount not to exceed $2,000,000, (e) the redemption of the Class B shares of
Delta Benefits Management Inc. held by Aon Group, Inc., pursuant to put and call
rights existing on the date hereof (f) scheduled payments of interest with
respect to Permitted Subordinated Indebtedness and any Permitted Refinancing
thereof (or, subject to any applicable subordination terms, upon acceleration),
and (g) scheduled payments of principal and interest with respect to, and
payment of fees and other charges required by the terms of, the Post-Petition
Skymiles Facility (or, subject to the Skymiles Intercreditor Agreement, upon
acceleration), provided that no such payments shall be made from proceeds of
Collateral other than Skymiles Collateral (A) from and after the issuance of any
Notice of Actionable Default and until the withdrawal of all pending Notices of
Actionable Default or (B) during the period in which the Excess Aggregate Cash
on Hand is lower than the lesser of (x) $200 million and (y) the aggregate
amount of "Obligations" (as defined in the Post-Petition Skymiles Facility
Documents) outstanding at such time; provided that such Restricted Payments in
clause (a) shall be permitted so long as no Event of Default has occurred and is
continuing or would result after giving effect to such Restricted Payments and
the Administrative Agent shall not have notified Borrower to stop such payments.

          6.14 Change of Corporate Name or Location; Change of Fiscal Year.

          No Credit Party shall (a) change its name as it appears in official
filings in the state of its incorporation or other organization, (b) change its
chief executive office, principal place of business, corporate offices or
warehouses, hangars, terminals, maintenance facilities or other locations at
which Collateral with book value in excess of $5,000,000, individually or in the
aggregate, is held or stored, or the location of its records concerning such
Collateral, (c)


                                       48



change the type of entity that it is, (d) change its organization identification
number, if any, issued by its state of incorporation or other organization, or
(e) change its state of incorporation or organization, in each case, without at
least thirty (30) days' prior written notice to the Administrative Agent;
provided, that (i) in the case of clauses (b) or (e), any such new location
shall be in the continental United States and (ii) the Credit Parties shall be
in compliance with the Spare Parts Mortgage at all times. No Credit Party shall
change its Fiscal Year or the Post-Petition Skymiles Facility Documents.

          6.15 No Impairment of Intercompany Transfers.

          No Credit Party shall directly or indirectly enter into or become
contractually bound by any agreement, instrument, indenture or other obligation
(other than this Agreement, the other Loan Documents and the Post-Petition
Skymiles Facility Documents) that could directly or indirectly restrict,
prohibit or require the consent of any Person with respect to the payment of
dividends or distributions by a Credit Party or the making or repayment of
intercompany loans by a Subsidiary of Borrower to Borrower; other than (a)
prohibitions or restrictions existing on the Closing Date and listed on
Disclosure Schedule 6.15, and any extension or renewal thereof on terms no less
favorable to such Credit Party and (b) prohibitions or restrictions set forth in
the Loan Documents or the Post-Petition Skymiles Facility (to the extent
consistent with such provisions in the Loan Documents).

          6.16 Limitation on Negative Pledge Clauses.

          No Credit Party will enter into any agreement (other than the Loan
Documents) with any Person which prohibits or limits the ability of such Credit
Party to create, incur, assume or suffer to exist any Lien securing the
Obligations upon any of its properties, assets or revenues, whether now owned or
hereafter acquired, other than agreements that contain (a) prohibitions or
limitations existing on the Closing Date and listed on Disclosure Schedule 6.16,
and any extension or renewal thereof on terms no less favorable to the Credit
Parties, (b) prohibitions set forth in the Loan Documents and the Post-Petition
Skymiles Facility Documents, (c) customary prohibitions, restrictions and
conditions contained in agreements relating to the sale of a Subsidiary pending
such sale; provided, that such restrictions and conditions apply only to the
Subsidiary that is to be sold and such sale is permitted hereunder, (d)
prohibitions or restrictions imposed by any agreement relating to secured
Indebtedness or other obligations permitted by this Agreement if such
restriction or condition applies only to property secured or financed by such
Indebtedness or other obligations and (e) restrictions prohibiting Liens
contained in agreements relating to the use and occupancy of airport premises
and facilities, operating leases, Capital Leases or Licenses with respect to
properties subject thereto and interests created therein.

          6.17 No Speculative Transactions.

          No Credit Party shall engage in any transaction involving commodity
options, futures contracts or similar transactions, except solely to hedge in
the ordinary course of business.


                                       49



          6.18 Real Estate Purchases and Leases.

          No Credit Party shall purchase a fee simple ownership interest in real
estate with an aggregate purchase price in excess of $30,000,000. No Credit
Party shall modify, amend, extend, cancel, terminate or otherwise change in any
materially adverse manner any term, covenant or condition of any lease,
sublease, usufruct, use agreement or other occupancy or facility agreement
affecting its Real Estate as of the Closing Date, and no Credit Party shall
hereafter enter into any new lease, sublease, usufruct, use agreement or other
occupancy or facility agreement granting such Credit Party possessory, use or
similar rights in or to any real estate, unless such modification, amendment,
extension, cancellation, termination or other change, or such new lease,
sublease, usufruct, use agreement or other occupancy or facility agreement, (a)
is not prohibited by the Collateral Documents, (b) would not have a Material
Adverse Effect, and (c) would not materially and adversely affect the
Administrative Agent's Liens, for the benefit of Secured Parties, in the
Collateral stored or located at the location to which such modification or other
change, or such new lease or other agreement relates. Further, no Credit Party
shall assign, sublet or otherwise dispose of any such lease, sublease, usufruct,
use agreement or other occupancy or facility agreement to which such Credit
Party is now or hereafter a counterparty, except for an assignment, subletting
or disposition that (x) is not prohibited by Section 6.8 or the Collateral
Documents, (y) would not have a Material Adverse Effect and (z) would not
materially and adversely affect the Administrative Agent's Liens, for the
benefit of Secured Parties, in the Collateral stored or located at such
location.

          6.19 Changes Relating to Permitted Subordinated Indebtedness and
Post-Petition Skymiles Facility Documents.

          (a) No Credit Party shall change or amend the terms of any Permitted
Subordinated Indebtedness (or any indenture or agreement in connection
therewith) if the effect of such amendment is to: (i) increase the interest rate
on such Permitted Subordinated Indebtedness; (ii) change the dates upon which
payments of principal or interest are due on such Permitted Subordinated
Indebtedness other than to extend such dates; (iii) change any default or event
of default other than to delete or make less restrictive any default provision
therein with respect to such Permitted Subordinated Indebtedness; (iv) change
the redemption or prepayment provisions of such Permitted Subordinated
Indebtedness other than to extend the dates therefor or to reduce the premiums
payable in connection therewith; (v) grant any security or collateral to secure
payment of such Permitted Subordinated Indebtedness; or (vi) change or amend any
other term, in each case, if such change or amendment would materially increase
the obligations of the Credit Party thereunder or confer additional material
rights on the holder of such Permitted Subordinated Indebtedness, in each case,
in a manner adverse to any Credit Party, the Administrative Agent or any Lender.

          (b) No Credit Party shall change or amend the terms of the
Post-Petition Skymiles Facility Documents, if the effect of such amendment is
to: (i) increase the interest rate on the Post-Petition Skymiles Facility; (ii)
change the dates upon which payments of principal or interest are due on the
Post-Petition Skymiles Facility other than to extend such dates; (iii) change
any default or event of default other than to delete or make less restrictive
any default provision therein with respect to the Post-Petition Skymiles
Facility; (iv) change the redemption or prepayment provisions of the
Post-Petition Skymiles Facility other than to extend


                                       50



the dates therefor or to reduce the premiums payable in connection therewith;
(v) grant any security or collateral to secure payment of the Post-Petition
Skymiles Facility; or (vi) change or amend any other term if such change or
amendment would materially increase the obligations of the Credit Party
thereunder or confer additional material rights on the holder of the
Post-Petition Skymiles Facility, in each case, in a manner adverse to any Credit
Party, the Administrative Agent or any Lender.

          6.20 Cancellation of Indebtedness.

          No Credit Party shall, nor shall they permit any of its Subsidiaries
to, cancel any claim or Indebtedness owed to any of them except (i) in the
ordinary course of business consistent with past practice, (ii) in respect of
intercompany Indebtedness among the Credit Parties or (iii) negotiated on an
arm's-length basis and for consideration reasonably deemed by the Borrower to be
reasonable.

7. TERM

          7.1 Termination.

          The financing arrangements contemplated hereby shall be in effect
until the Maturity Date, and the Loans and all other Obligations shall be
automatically due and payable in full on such date.

          7.2 Survival of Obligations Upon Termination of Financing
Arrangements.

          Except as otherwise expressly provided for in the Loan Documents, no
termination or cancellation (regardless of cause or procedure) of any financing
arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the rights of the
Administrative Agent and the Lenders relating to any unpaid portion of the Loans
or any other Obligations, due or not due, liquidated, contingent or unliquidated
or any transaction or event occurring prior to such termination, or any
transaction or event, the performance of which is required after the Maturity
Date. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of the
Administrative Agent and each Lender, all as contained in the Loan Documents,
shall not terminate or expire, but rather shall survive any such termination or
cancellation and shall continue in full force and effect until the Termination
Date; provided, that the provisions of Article 13, the payment obligations under
Sections 1.13 and 1.14, and the indemnities contained in the Loan Documents
shall survive the Termination Date.


                                       51



8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES

          8.1 Events of Default.

          The occurrence of any one or more of the following events (regardless
of the reason therefor) shall constitute an "Event of Default" hereunder:

          (a) Borrower (i) fails to make any payment of principal of the Loans
or any Letter of Credit Obligation when due and payable, (ii) fails to make any
payment of interest on, or Fees owing in respect of, the Loans or any of the
other Obligations within three (3) Business Days of the date when due and
payable, or (iii) fails to pay or reimburse the Administrative Agent or any L/C
Issuer or Lender for any expense reimbursable hereunder or under any other Loan
Document within ten (10) days following the demand for such reimbursement or
payment of expenses.

          (b) Any Credit Party fails or neglects to perform, keep or observe any
of the provisions of Sections 1.2, 1.3, 1.4, 1.7, 5.4, 5.14, 5.15, 5.16 or
Article 6, the insurance provisions in the Collateral Documents or any of the
provisions set forth in Annexes C or G, respectively.

          (c) Borrower fails or neglects to perform, keep or observe any of the
provisions of Section 4.1 or any provisions set forth in Annexes E or F,
respectively, and the same shall remain unremedied for three (3) Business Days
or more.

          (d) (x) Borrower fails to perform or observe any covenant, condition
or agreement to be performed or observed by it under the Aircraft Mortgage, and
such failure continues unremedied for a period for sixty (60) days after receipt
by Borrower of a notice thereof from the Administrative Agent (such failure, a
"Maintenance Default"); provided that, if Borrower shall have undertaken to cure
any such failure which arises under Sections 7.02 or 7.04 of the Aircraft
Mortgage as those sections relate to maintenance, service, repair or overhauls
and such failure is capable of being remedied, no such failure shall constitute
an Event of Default for a period of ninety (90) days after such notice is
received by Borrower ("Maintenance Cure Period") so long as Borrower is
diligently proceeding to remedy such failure; provided further that, if not
cured, such failure shall constitute an Event of Default if not remedied within
180 days after receipt by Borrower of such notice of a Maintenance Default or
(y) any Credit Party fails or neglects to perform, keep or observe any other
provision of this Agreement, any of the other Loan Documents or the Collateral
Documents (other than any provision embodied in or covered by any other clause
of this Section 8.1) and the same shall remain unremedied for thirty (30) days
or more.

          (e) Except for defaults resulting directly from the commencement of
the Cases and defaults resulting from obligations (other than the Obligations)
with respect to which the Bankruptcy Code prohibits any Credit Party from
complying or permits an Credit Party not to comply, a default or breach occurs
under any other agreement, document or instrument to which any Credit Party is a
party that is not cured within any applicable grace period therefor, and such
default or breach (i) involves the failure to make any payment when due in
respect of any post-petition Indebtedness or Guaranteed Indebtedness (other than
the Obligations) of any


                                       52



Credit Party in excess of $25,000,000 in the aggregate (including (x) undrawn
committed or available amounts and (y) amounts owing to all creditors under any
combined or syndicated credit arrangements), or (ii) causes, or permits any
holder of such Indebtedness or Guaranteed Indebtedness or a trustee to cause,
post-petition Indebtedness or Guaranteed Indebtedness or a portion thereof in
excess of $25,000,000 in the aggregate to become due prior to its stated
maturity or prior to its regularly scheduled dates of payment, or cash
collateral to be demanded in respect thereof, in each case, regardless of
whether such default is waived, or such right is exercised, by such holder or
trustee.

          (f) Any information contained in any Borrowing Base Certificate is
untrue or incorrect in any material respect, or any representation or warranty
herein or in any Loan Document or in any written statement, report, financial
statement or certificate (other than a Borrowing Base Certificate) made or
delivered to the Administrative Agent or any Lender by any Credit Party is
untrue or incorrect in any material respect, in each case, as of the date when
made or deemed made.

          (g) [Reserved].

          (h) The Loan Documents and the Orders shall, for any reason, cease to
create a valid Lien on any of the Collateral purported to be covered thereby or
such Lien shall cease to be a perfected Lien having the priority provided for
herein and in the Orders, or any Credit Party shall so allege in any pleading
filed in any court or any material provision of any Loan Document shall, for any
reason, cease to be valid and binding on each Credit Party party thereto (or any
Credit Party shall challenge the enforceability of any Loan Document or shall
assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms).

          (i) A final unstayed judgment or judgments for the payment of money in
excess of $10,000,000 in the aggregate at any time are outstanding against one
or more of the Credit Parties (which judgments are not covered by insurance
policies as to which liability has been accepted by the insurance carrier), and
the same are not, within thirty (30) days after the entry thereof, discharged or
bonded pending appeal, or such judgments are not discharged prior to the
expiration of any such stay.

          (j) Suspension of all or substantially all of the Credit Parties'
flight and other operations for longer than two days (excluding, however, any
such suspension as a result of an order by an Aviation Authority due to a force
majeure or any other extraordinary event similarly affecting all major U.S.
commercial carriers) or entry of an order by the Bankruptcy Court authorizing
the same.

          (k) Any Change of Control occurs.

          (l) Any Air Carrier shall cease to be a Certificated Air Carrier or a
"citizen of the United States" as defined in Section 40102(a)(15) of Title 49.

          (m) (i) In the case of any Primary Route, any applicable Aviation
Authority revokes, terminates or cancels any Credit Party's Permits to use,
occupy or maintain such


                                       53



Primary Route, whether as a result of any revocation, termination or
cancellation of any Primary Gate, Primary Slot or otherwise; (ii) in the case of
any Primary Slot, any applicable Aviation Authority revokes, terminates or
cancels any Credit Party's Permits to use, occupy or maintain such Primary Slot;
provided, that an Event of Default shall not occur under this clause (m)(ii) if
the aggregate value of all such Primary Slots that have been revoked, terminated
or canceled does not exceed an amount equal to the sum of (i) $25,000,000 plus
(ii) the lesser of (x) the amount of cash and Cash Equivalents held in the SGR
Cash Collateral Account and (y) $25,000,000; provided, further, that, in the
event the Administrative Agent, in its reasonable discretion, determines that
the aggregate value of all such Primary Slots that have been revoked, terminated
or canceled exceeds $25,000,000, the Administrative Agent shall promptly request
an appraisal from an Appraiser, and each Credit Party shall permit such
appraisals to be conducted, for purposes of determining such value.

          (n) In the case of any other Slots, Gates or Routes, any applicable
Aviation Authority modifies, suspends, revokes, terminates, cancels or otherwise
takes any action that adversely affects any Credit Party's Permits or any Credit
Party's use or occupation or maintenance of such Slots, Gates and Routes due to
any Credit Party's failure to abide by applicable law or any contract governing
the use of such Slots, Gates and Routes, or any Credit Party otherwise ceases to
use, occupy or maintain such Slots, Gates and Routes, and any event referred to
in this clause (n) could reasonably be expected to have a Material Adverse
Effect.

          (o) Any Lien shall arise on the assets of any Credit Party in favor of
the PBGC or an ERISA Plan and such lien has not been stayed pursuant to the
Bankruptcy Code, but only to the extent that such Lien could reasonably be
expected to result in liability to any Credit Party in an amount which would
exceed $1,000,000.

          (p) Any of the Cases shall be dismissed (or the Bankruptcy Court shall
make a ruling requiring the dismissal of the Cases) or converted to a case under
chapter 7 of the Bankruptcy Code (except to the extent the disposition of assets
upon such liquidation would be permitted under Section 6.8), or any Credit Party
shall file any pleading requesting any such relief; a trustee under chapter 7 or
chapter 11 of the Bankruptcy Code, a responsible officer or an examiner with
enlarged powers relating to the operation of the business (powers beyond those
set forth in section 1106(a)(3) and (4) of the Bankruptcy Code) under section
1106(b) of the Bankruptcy Code shall be appointed in any of the Cases; or an
application shall be filed by any Credit Party for the approval of, or the Court
shall enter an order granting, (i) other than any Claim of Amex under the
Post-Petition Skymiles Facility Documents with respect to the Skymiles
Collateral, any other Claim having priority senior to or pari passu with the
claims of the Administrative Agent and the Lenders under the Loan Documents or,
without the prior written consent of the Administrative Agent, any other claim
having priority over any or all administrative expenses of the kind specified in
sections 503(b) or 507(b) of the Bankruptcy Code (other than the Carve-Out) or
(ii) any Lien on the Collateral having a priority senior to or pari passu with
the Liens and security interests granted herein, except the Liens on Skymiles
Collateral securing the obligations under the Post-Petition Skymiles Facility
and except as otherwise expressly provided herein.

          (q) Any Credit Party shall file a motion seeking, or the Bankruptcy
Court shall enter, an order (i) approving any payment (as adequate protection or
otherwise) on account


                                       54



of any Claim against any Credit Party arising or deemed to have arisen prior to
the Petition Date, other than a Permitted Prepetition Payment, (ii) approving
any other First Day Order not reasonably acceptable to the Administrative Agent,
(iii) granting relief from the automatic stay applicable under section 362 of
the Bankruptcy Code to any holder of any security interest to permit foreclosure
or obtain liens on any assets which have a value in excess of $10,000,000 (it
being understood that neither the relinquishment by the Borrower or Guarantors
of Section 1110 Assets, nor the foreclosure of security interests in Section
1110 Assets (or in property in the possession of the applicable secured party)
as to which defaults have not been cured pursuant to Section 1110 of the
Bankruptcy Code, shall be considered to be included in this paragraph), (iv)
authorizing the sale of all or substantially all of Borrower's assets (unless
such order contemplates payment in full in cash of the Obligations upon
consummation of such sale, whether pursuant to a Plan of Reorganization or
otherwise) or (v) except to the extent the disposition of assets upon such
liquidation would be permitted under Section 6.8, approving the implementation
of liquidation under chapter 11 of the Bankruptcy Code in any Case; or

          (r) (i) The Interim Order shall cease to be in full force and effect
and the Final Order shall not have been entered prior to such cessation, or (ii)
the Final Order shall not have been entered by the Bankruptcy Court on or before
the 35th day following the Petition Date (or such later day not later than the
55th day following the Petition Date as the Arrangers shall have agreed in their
sole discretion), or (iii) from and after the date of entry thereof, the Final
Order shall cease to be in full force and effect, or (iv) any Credit Party shall
fail to comply with the terms of the Interim Order or the Final Order in any
material respect, or (v) the Interim Order or the Final Order shall be amended,
supplemented, stayed, reversed, vacated or otherwise modified (or any of the
Credit Parties shall apply for authority to do so) in any manner that affects
the rights or duties of the Administrative Agent, the Arrangers or the Lenders,
in each case, without the prior written consent of the Administrative Agent.

          8.2 Remedies.

          (a) If any Event of Default has occurred and is continuing, without
further order of, application to, or action by, the Bankruptcy Court, the
Administrative Agent may (and at the written request of any of the Requisite
Term A Lenders, the Requisite Term B Lenders or the Requisite Term C Lenders
shall), without notice except as otherwise expressly provided herein, increase
the rate of interest applicable to the Loans to the Default Rate.

          (b) If any Event of Default has occurred and is continuing, without
further order of, application to, or action by, the Bankruptcy Court, (i) the
Administrative Agent may (and at the written request of (A) the Requisite
Lenders or (B) after 120 days following the occurrence of such Event of Default,
any of the Requisite Term A Lenders, the Requisite Term B Lenders or the
Requisite Term C Lenders, shall), without notice, declare all or any portion of
the Obligations, including all or any portion of any Loan to be forthwith due
and payable, all without presentment, demand, protest or further notice of any
kind, all of which are expressly waived by Borrower and each other Credit Party;
or (ii) the Administrative Agent may (and at the written request of the
Requisite Lenders, shall), without notice except as required by the Orders,
exercise any rights and remedies provided to the Administrative Agent under the
Loan Documents or at law or equity, including all remedies provided under the
Code.


                                       55



          (c) In addition, subject solely to any requirement of the giving of
notice by the terms of the Interim Order or the Final Order, the automatic stay
provided in section 362 of the Bankruptcy Code shall be deemed automatically
vacated without further action or order of the Bankruptcy Court and the
Administrative Agent and the Lenders shall be entitled to exercise all of their
respective rights and remedies under the Loan Documents, including, without
limitation, all rights and remedies with respect to the Collateral and the
Guarantors.

          8.3 Waivers by Credit Parties.

          Except as otherwise provided for in this Agreement or by applicable
law, each Credit Party waives: (a) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of acceleration,
protest, default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by the
Administrative Agent on which any Credit Party may in any way be liable, and
hereby ratifies and confirms whatever the Administrative Agent may do in this
regard, (b) all rights to notice and a hearing prior to the Administrative
Agent's taking possession or control of, or to the Administrative Agent's
replevy, attachment or levy upon, the Collateral or any bond or security that
might be required by any court prior to allowing the Administrative Agent to
exercise any of their remedies, and (c) the benefit of all valuation, appraisal,
marshaling and exemption laws.

9 . GUARANTY

          9.1 Guaranty of Obligations of Borrower. Each Guarantor hereby jointly
and severally unconditionally guarantees to Secured Parties, and their
respective successors, endorsees, transferees and assigns, the prompt payment
(whether at stated maturity, by acceleration or otherwise) and performance of
the Obligations of Borrower. Guarantors agree that this Agreement is a guaranty
of payment and performance and not of collection, and that their obligations
under this Agreement shall be primary, absolute and unconditional, irrespective
of, and unaffected by:

          (a) the genuineness, validity, regularity, enforceability or any
future amendment of, or change in any other Loan Document or any other
agreement, document or instrument to which any Credit Party and/or Guarantors
are or may become a party;

          (b) the absence of any action to enforce any other Loan Document or
the waiver or consent by any Secured Party with respect to any of the provisions
thereof;

          (c) the existence, value or condition of, or failure to perfect its
Lien against, any Collateral for the Obligations or any action, or the absence
of any action, by Secured Parties in respect thereof (including, without
limitation, the release of any such security);

          (d) the insolvency of any Credit Party; or

          (e) any other action or circumstances which might otherwise constitute
a legal or equitable discharge or defense of a surety or guarantor,


                                       56



it being agreed by each Guarantor that its obligations under this Agreement
shall not be discharged until the Termination Date. Each Guarantor shall be
regarded, and shall be in the same position, as principal debtor with respect to
the Obligations. Each Guarantor agrees that any notice or directive given at any
time to Secured Parties which is inconsistent with the waiver in the immediately
preceding sentence shall be null and void and may be ignored by Secured Parties,
and, in addition, may not be pleaded or introduced as evidence in any litigation
relating to this Agreement for the reason that such pleading or introduction
would be at variance with the written terms of this Agreement, unless Secured
Parties have specifically agreed otherwise in writing. It is agreed among each
Guarantor and Secured Parties that the foregoing waivers are of the essence of
the transaction contemplated by the Loan Documents and that, but for this
Agreement and such waivers, Secured Parties would decline to enter into this
Agreement.

          9.2 Demand by Secured Parties. In addition to the terms of the
Guaranty set forth in Section 9.1 hereof, and in no manner imposing any
limitation on such terms, it is expressly understood and agreed that, if, at any
time, the outstanding principal amount of the Obligations under this Agreement
(including all accrued interest thereon) is declared to be immediately due and
payable, then Guarantors shall, without demand, pay to the holders of the
Obligations the entire amount of the outstanding Obligations due and owing to
such holders. Payment by Guarantors shall be made to Administrative Agent in
immediately available Federal funds to the Cash Collateral Account and applied
to the Obligations in accordance with Section 1.3.

          9.3 Enforcement of Guaranty. In no event shall any Secured Party have
any obligation (although it is entitled, at its option) to proceed against
Borrower or any other Credit Party or any Collateral pledged to secure
Obligations before seeking satisfaction from any or all of the Guarantors, and
Secured Parties may proceed, prior or subsequent to, or simultaneously with, the
enforcement of Secured Parties' rights hereunder, to exercise any right or
remedy which it may have against any Collateral, as a result of any Lien it may
have as security for all or any portion of the Obligations.

          9.4 Waiver. In addition to the waivers contained in Section 9.1
hereof, Guarantors waive, and agree that they shall not at any time insist upon,
plead or in any manner whatever claim or take the benefit or advantage of, any
appraisal, valuation, stay, extension, marshaling of assets or redemption laws,
or exemption, whether now or at any time hereafter in force, which may delay,
prevent or otherwise affect the performance by Guarantors of their Obligations
under, or the enforcement by Secured Parties of, this Agreement. Guarantors
hereby waive diligence, presentment and demand (whether for non-payment or
protest or of acceptance, maturity, extension of time, change in nature or form
of the Obligations, acceptance of further security, release of further security,
composition or agreement arrived at as to the amount of, or the terms of, the
Obligations, notice of adverse change in Borrower's financial condition or any
other fact which might increase the risk to Guarantors) with respect to any of
the Obligations or all other demands whatsoever and waive the benefit of all
provisions of law which are or might be in conflict with the terms of this
Agreement. Guarantors represent, warrant and jointly and severally agree that,
as of the date of this Agreement, their obligations under this Agreement are not
subject to any offsets or defenses against Secured Parties or any Credit Party
of any kind. Guarantors further jointly and severally agree that their
obligations under this Agreement shall


                                       57



not be subject to any counterclaims or offsets or defenses against Secured
Parties or against any Credit Party of any kind which may arise in the future.

          9.5 Benefit of Guaranty. The provisions of this Agreement are for the
benefit of Secured Parties and their respective successors, transferees,
endorsees and assigns, and nothing herein contained shall impair, as between any
Credit Party and Secured Parties, the obligations of any Credit Party under the
Loan Documents. In the event all or any part of the Obligations are transferred,
indorsed or assigned by any Secured Party to any Person or Persons, any
reference to "Secured Party" herein shall be deemed to refer equally to such
Person or Persons.

          9.6 Modification of Obligations, Etc. Each Guarantor hereby
acknowledges and agrees that Secured Parties may at any time or from time to
time, with or without the consent of, or notice to, Guarantors or any of them:

          (a) change or extend the manner, place or terms of payment of, or
renew or alter all or any portion of, the Obligations;

          (b) take any action under or in respect of the Loan Documents in the
exercise of any remedy, power or privilege contained therein or available to it
at law, equity or otherwise, or waive or refrain from exercising any such
remedies, powers or privileges;

          (c) amend or modify, in any manner whatsoever, the Loan Documents,
other than this Section 9;

          (d) extend or waive the time for any Credit Party's performance of, or
compliance with, any term, covenant or agreement on its part to be performed or
observed under the Loan Documents, or waive such performance or compliance or
consent to a failure of, or departure from, such performance or compliance;

          (e) take and hold Collateral for the payment of the Obligations
guaranteed hereby or sell, exchange, release, dispose of, or otherwise deal
with, any property pledged, mortgaged or conveyed, or in which Secured Parties
have been granted a Lien, to secure any Obligations;

          (f) release anyone who may be liable in any manner for the payment of
any amounts owed by other Guarantors or any other Credit Party to any Secured
Party;

          (g) modify or terminate the terms of any intercreditor or
subordination agreement pursuant to which claims of other creditors of any
Guarantor or any Credit Party are subordinated to the claims of Secured Parties;
and/or

          (h) apply any sums by whomever paid or however realized to any amounts
owing by any other Guarantor or any other Credit Party to any Secured Party in
such manner as any Secured Party shall determine in its discretion;

and Secured Parties shall not incur any liability to Guarantors as a result
thereof, and no such action shall impair or release the Obligations of
Guarantors or any of them under this Agreement.


                                       58



          9.7 Waiver of Subrogation, Etc. Notwithstanding anything to the
contrary in this Agreement, or in any other Loan Document, each Guarantor
hereby:

          (a) expressly and irrevocably waives, on behalf of itself and its
successors and assigns (including any surety), any and all rights at law or in
equity to subrogation, to reimbursement, to exoneration, to contribution, to
indemnification, to set off or to any other rights that could accrue to a surety
against a principal, to a guarantor against a principal, to a guarantor against
a maker or obligor, to an accommodation party against the party accommodated, to
a holder or transferee against a maker, or to the holder of any claim against
any Person, and which such Guarantor may have or hereafter acquire against any
Credit Party in connection with or as a result of such Guarantor's execution,
delivery and/or performance of this Agreement, or any other documents to which
such Guarantor is a party or otherwise; and

          (b) acknowledges and agrees that this waiver is intended to benefit
Secured Parties and shall not limit or otherwise effect any Guarantor's
liability hereunder or the enforceability of this Agreement and their rights
under this Section 9.7 shall survive payment in full of the Obligations.

          9.8 Election of Remedies. If Administrative Agent may, under
applicable law, proceed to realize benefits under any of the Loan Documents
giving Secured Parties a Lien upon any Collateral owned by any Credit Party,
either by judicial foreclosure or by non-judicial sale or enforcement,
Administrative Agent may, at its sole option, determine which of such remedies
or rights it may pursue without affecting any of such rights and remedies under
this Agreement. If, in the exercise of any of its rights and remedies,
Administrative Agent shall forfeit any of its rights or remedies, including its
right to enter a deficiency judgment against any Credit Party, whether because
of any applicable laws pertaining to "election of remedies" or the like,
Guarantors hereby consent to such action by Administrative Agent and waive any
claim based upon such action, even if such action by Administrative Agent shall
result in a full or partial loss of any rights of subrogation which Guarantors
might otherwise have had but for such action by Administrative Agent. Any
election of remedies which results in the denial or impairment of the right of
Administrative Agent to seek a deficiency judgment against any Credit Party
shall not impair each Guarantor's obligation to pay the full amount of the
Obligations. In the event Administrative Agent shall bid at any foreclosure or
trustee's sale or at any private sale permitted by law or the Loan Documents,
Administrative Agent may bid all or less than the amount of the Obligations and
the amount of such bid need not be paid by Administrative Agent but shall be
credited against the Obligations in accordance with Section 1.3. The amount of
the successful bid at any such sale shall be conclusively deemed to be the fair
market value of the Collateral and the difference between such bid amount and
the remaining balance of the Obligations shall be conclusively deemed to be the
amount of the Obligations guaranteed under this Agreement, notwithstanding that
any present or future law or court decision or ruling may have the effect of
reducing the amount of any deficiency claim to which Secured Parties might
otherwise be entitled but for such bidding at any such sale.


                                       59



10. SECURITY

          10.1 Security.

          (a) To secure the prompt and complete payment, performance and
observance of all of the Obligations, in addition to other "Collateral" upon
which a Lien is granted under the other Collateral Documents, each Credit Party
hereby grants, assigns, conveys, mortgages, pledges, hypothecates and transfers
to Administrative Agent, for itself and for the benefit of the Secured Parties,
a first priority Lien (subject only to (i) the Liens of the Skymiles Agent (as
defined in the Skymiles Intercreditor Agreement) in the Skymiles Collateral
pursuant to an order of the Bankruptcy Court in form and substance satisfactory
to the Administrative Agent, (ii) valid, perfected, nonavoidable and enforceable
Liens existing as of the Petition Date, (iii) valid liens in existence at the
commencement of the Cases to the extent perfected subsequent to such
commencement as permitted by Section 546(b) of the Code, (iv) the Carve-Out and
(v) Permitted Liens permitted pursuant to Section 6.7(a), (c), (f), (i), (j)
(subject, in the case of Amex, to the Skymiles Intercreditor Agreement), (n),
(o), (q), (r) or (s)) in accordance with sections 364(c)(2) and 364(c)(3) of the
Bankruptcy Code upon all of the following property now owned or at any time
hereafter acquired by a Credit Party or in which such Credit Party now has or at
any time in the future may acquire any right, title or interest (capitalized
terms contained in this section, unless the context indicates otherwise, or
unless defined elsewhere herein, have the meanings provided for in the Code to
the extent the same is used or defined therein):

               (i) all Accounts;

               (ii) all Chattel Paper;

               (iii) all Documents;

               (iv) all General Intangibles (including payment intangibles and
     Software);

               (v) all Goods, Inventory and Equipment, including spare parts,
     Flight Simulators and Tooling, and other personal property, whether
     tangible or intangible or wherever located;

               (vi) all Instruments;

               (vii) all Investment Property;

               (viii) all Vehicles;

               (ix) all real property (subject to Section 5.12(b));

               (x) the commercial tort claims described on Disclosure Schedule
     10.1;

               (xi) all Deposit Accounts of any Credit Party, including all
     Blocked Accounts, Concentration Accounts and all other bank accounts and
     all deposits therein;


                                       60



               (xii) all money, cash or cash equivalents of any Credit Party;

               (xiii) all Supporting Obligations and Letter of Credit Rights of
     any Credit Party;

               (xiv) to the extent not otherwise included, all monies and other
     property of any kind which is, after the Petition Date, received by such
     Credit Party in connection with refunds with respect to taxes, assessments
     and governmental charges imposed on such Credit Party or any of its
     property or income;

               (xv) to the extent not otherwise included, all causes of action
     (other than claims of the Credit Parties under sections 544, 545, 547 and
     548 of the Bankruptcy Code) and all monies and other property of any kind
     received therefrom, and all monies and other property of any kind recovered
     by any Credit Party; and

               (xvi) all property of any Credit Party held by the Administrative
     Agent or any other Secured Party, including all property of every
     description, in the possession or custody of or in transit to the
     Administrative Agent or such Secured Party for any purpose, including
     safekeeping, collection or pledge, for the account of such Grantor or as to
     which such Grantor may have any right or power;

               (xvii) to the extent not otherwise included, all Proceeds of each
     of the foregoing, tort claims, insurance claims and other rights to payment
     not otherwise included in the foregoing and products of the foregoing and
     all accessions to, substitutions and replacements for, and rents and
     profits of, each of the foregoing;

          provided, that "Collateral" shall not include (i) the Excluded
Collateral provided that if and when any property shall cease to be Excluded
Collateral, such property shall be deemed at all times from and after the date
such property ceased to be Excluded Collateral to constitute Collateral and (ii)
any General Intangibles or other rights arising under any contract, instrument,
license or other document if the grant of a security interest therein would
constitute a breach or violation of a valid and effective restriction in favor
of a third party, but only to the extent, and for so long as, in the case of
clause (ii) such restriction is not terminated or rendered unenforceable or
otherwise deemed ineffective by any applicable law.

          (b) [Reserved].

          (c) To the extent a security interest hereunder would be created in
any asset in which a security interest is created under any Collateral Document,
the rights, remedies and obligations of the relevant Credit Party and the
Secured Parties with respect to such asset shall be governed by such Collateral
Document and not this Agreement.

          10.2 Perfection of Security Interests.

          (a) At any time and from time to time, upon the reasonable request of
the Administrative Agent and at the sole expense of the Credit Parties, each
Credit Party shall promptly and duly execute and deliver any and all such
further instruments and documents and take such further actions as the
Administrative Agent may deem desirable to obtain the full


                                       61



benefits of any security interest granted or purported to be granted by such
Credit Party hereunder and of the rights and powers herein granted, including
(i) upon the reasonable request of the Administrative Agent, using its
commercially reasonable efforts to secure all consents and approvals necessary
or appropriate for the assignment to or for the benefit of Administrative Agent
of any License or Contract held by such Credit Party and to enforce the security
interests granted hereunder, (ii) unless Administrative Agent shall otherwise
consent in writing (which consent may be revoked), delivering to Administrative
Agent all Collateral consisting of negotiable Documents and certificated
securities (in each case, accompanied by stock powers, allonges or other
instruments of transfer executed in blank) promptly after such Credit Party
receives the same, (iii) delivering any requested Chattel Paper or Instrument to
Administrative Agent (in each case accompanied by instruments of transfer
executed in blank), (iv) obtaining or using commercially reasonable efforts to
obtain, (A) waivers or subordinations of Liens from landlords at locations
required by Section 5.8 of this Agreement and (B) signed acknowledgements of
Administrative Agent's Liens from bailees at locations required by Section 5.8
of this Agreement having possession of any Credit Party's Goods that they hold
for the benefit of Secured Parties, (v) to the extent required by this Agreement
and not waived by Administrative Agent in writing (which waiver may be revoked)
obtaining authenticated Control Letters from each issuer of uncertificated
securities, securities intermediary, or commodities intermediary issuing or
holding any financial assets or commodities, in each case constituting
Collateral, to or for any Credit Party; provided, that the Administrative Agent
shall not deliver a notice that it is exercising exclusive control over any
financial assets or commodities to any such issuer, securities intermediary or
commodities intermediary unless an Event of Default has occurred and is
continuing, (vi) in accordance with and to the extent required by Annex C to
this Agreement, obtaining a blocked account or similar agreement with each bank
or financial institution holding a Deposit Account for such Credit Party;
provided, that the Administrative Agent shall not deliver a notice that it is
exercising exclusive control over any Deposit Account to any such bank or
financial institution unless an Event of Default has occurred and is continuing,
(vii) for each Credit Party that is or becomes the beneficiary of a letter of
credit with a face amount in excess of $1,000,000, promptly, and in any event
within two (2) Business Days after becoming a beneficiary, notifying
Administrative Agent thereof and thereafter, unless the related Letter-of-Credit
Rights constitute a Supporting Obligation for which Administrative Agent's
security interest is perfected, using its commercially reasonable efforts to
cause the issuer and/or confirmation bank with respect to such Letter-of-Credit
Rights to enter into a tri-party agreement with Administrative Agent assigning
such Letter-of-Credit Rights to Administrative Agent and directing all payments
thereunder to a Blocked Account, all in form and substance reasonably
satisfactory to Administrative Agent, (viii) taking all steps necessary to grant
the Administrative Agent control of all electronic chattel paper in accordance
with the Code and all "transferable records" as defined in each of the Uniform
Electronic Transactions Act and the Electronic Signatures in Global and National
Commerce Act, (ix) promptly, and in any event within five (5) Business Days
after the same is acquired by it, notifying the Administrative Agent of any
commercial tort claim (as defined in the Code) involving a claim of more than
$1,000,000 acquired by it and if requested by the Administrative Agent, entering
into a supplement to this Agreement, granting to Administrative Agent a Lien in
such commercial tort claim, (x) maintaining complete and accurate stock records,
(xi) except as otherwise provided in clause (vii) hereof, delivering to the
Administrative Agent all documents, certificates and Instruments necessary or
desirable to perfect the Administrative Agent's Lien on letters of


                                       62



credit on which such Credit Party is named as beneficiary and all acceptances
issued in connection therewith and (xii) taking such other steps as are deemed
necessary or desirable to maintain the Administrative Agent's security interest
in the Collateral.

          (b) Each Credit Party hereby irrevocably authorizes the Administrative
Agent at any time and from time to time to file in any filing office in any
Uniform Commercial Code jurisdiction any initial financing statements and
amendments thereto that (a) indicate the Collateral (i) as all assets of such
Credit Party or words of similar effect, regardless of whether any particular
asset comprised in the Collateral falls within the scope of Article 9 of the
Code in such jurisdiction, or (ii) as being of an equal or lesser scope or with
greater detail, and (b) contain any other information required by part 5 of
Article 9 of the Code for the sufficiency or filing office acceptance of any
financing statement or amendment, including (i) whether such Credit Party is an
organization, the type of organization and any organization identification
number issued to such Credit Party, and (ii) in the case of a financing
statement filed as a fixture filing, a sufficient description of real property
to which the Collateral relates. Each Credit Party agrees to furnish any such
information to the Administrative Agent promptly upon request. Each Credit Party
also ratifies its authorization for the Administrative Agent to have filed in
any Uniform Commercial Code jurisdiction any initial financing statements or
amendments thereto if filed prior to the date hereof.

          (c) Notwithstanding subsections (a) and (b) of this Section 10.2, or
any failure on the part of any Credit Party or the Administrative Agent to take
any of the actions set forth in such subsections, the Liens and security
interests granted herein shall be deemed valid, enforceable and perfected by
entry of the Interim Order and the Final Order, as applicable. No financing
statement, notice of lien, mortgage, deed of trust or similar instrument in any
jurisdiction or filing office need be filed or any other action taken in order
to validate and perfect the Liens and security interests granted by or pursuant
to this Agreement, the Interim Order or the Final Order.

          10.3 Rights of Lender; Limitations on Lenders' Obligations.

          (a) Subject to each Credit Party's rights and duties under the
Bankruptcy Code (including section 365 of the Bankruptcy Code), it is expressly
agreed by each Credit Party that, anything herein to the contrary
notwithstanding, each such Credit Party shall remain liable under each of its
Contracts and each of its Licenses to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, unless such Credit
Party determines in its reasonable good faith judgment that such Contract or
License is no longer valuable to such Credit Party's business, economically or
otherwise. Neither the Administrative Agent nor any Secured Party shall have any
obligation or liability under any Contract or License by reason of or arising
out of this Agreement or the granting herein of a Lien thereon or the receipt by
Administrative Agent or any Secured Party of any payment relating to any
Contract or License pursuant hereto. Neither Administrative Agent nor any
Secured Party shall be required or obligated in any manner to perform or fulfill
any of the obligations of any Credit Party under or pursuant to any Contract or
License, or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of any performance
by any party under any Contract or License, or to present or file any claims, or
to take any action to


                                       63



collect or enforce any performance or the payment of any amounts which may have
been assigned to it or to which it may be entitled at any time or times.

          (b) Subject to Section 10.5 hereof, the Administrative Agent
authorizes each Credit Party to collect its Accounts, provided that such
collection is performed in accordance with such Credit Party's customary
procedures, and the Administrative Agent may, upon the occurrence and during the
continuation of any Event of Default and without notice, other than any
requirement of notice provided in the Orders, limit or terminate said authority
at any time.

          (c) Subject to any requirement of notice provided in the Orders, the
Administrative Agent may at any time after an Event of Default has occurred and
is continuing without prior notice to any Credit Party, notify Account Debtors
and other Persons obligated on the Collateral that Administrative Agent has a
security interest therein, and that payments shall be made directly to
Administrative Agent. Subject to any requirement of notice provided in the
Orders, upon the reasonable request of Administrative Agent, each Credit Party
shall so notify Account Debtors and other Persons obligated on Collateral. Once
any such notice has been given to any Account Debtor or other Person obligated
on the Collateral, the affected Credit Party shall not give any contrary
instructions to such Account Debtor or other Person without Administrative
Agent's prior written consent. Subject to any requirement of notice provided in
the Orders, upon the occurrence and during the continuation of an Event of
Default, the Administrative Agent may in its own name, or in the name of others,
communicate with such parties to such Accounts, Contracts, Instruments,
Investment Property and Chattel Paper to verify with such Persons to the
Administrative Agent's reasonable satisfaction the existence, amount and terms
of any such Accounts, Contracts, Instruments, Investment Property or Chattel
Paper.

          (d) Subject to any requirement of notice provided in the Orders,
Administrative Agent may at any time in Administrative Agent's own name, in the
name of a nominee of Administrative Agent or in the name of any Credit Party
communicate (by mail, telephone, facsimile or otherwise) with Account Debtors to
verify with such Persons, to Administrative Agent's satisfaction, the existence,
amount, terms of, and any other matter relating to, Accounts and/or payment
intangibles comprising Collateral; provided that unless an Event of Default
shall have occurred and be continuing, the Administrative Agent shall not do any
of the foregoing except during normal business hours and after giving such
Credit Party reasonable prior notice and opportunity to be present. If an Event
of Default shall have occurred and be continuing, each Credit Party, at its own
expense, shall cause the independent certified public accountants then engaged
by such Credit Party to prepare and deliver to Administrative Agent and each
Secured Party at any time and from time to time promptly upon Administrative
Agent's written request the following reports with respect to each Credit Party:
(i) a reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial
balances; and (iv) a test verification of such Accounts as Administrative Agent
may request. Administrative Agent may at any time in Administrative Agent's own
name, in the name of a nominee of Administrative Agent or in the name of any
Credit Party communicate (by mail, telephone, facsimile or otherwise) with
parties to Contracts and obligors in respect of Instruments to verify with such
Persons, to Administrative Agent's satisfaction, the existence, amount, terms
of, and any other matter relating to, Instruments, Chattel Paper and/or payment
intangibles comprising Collateral; provided that unless an Event of Default
shall have occurred and be continuing, the


                                       64



Administrative Agent shall not do any of the foregoing except during normal
business hours and after giving such Credit Party reasonable prior notice and
opportunity to be present. Each Credit Party, at its own expense, shall deliver
to Administrative Agent the results of each physical verification, if any, which
such Credit Party may in its discretion have made, or caused any other Person to
have made on its behalf, of all or any portion of its Inventory.

          10.4 Covenants of the Credit Parties with Respect to Collateral. Each
Credit Party covenants and agrees with Administrative Agent, for the benefit of
Secured Parties, that from and after the date of this Agreement and until the
Termination Date:

          (a) Maintenance of Records. Credit Parties shall keep and maintain, at
their own cost and expense, satisfactory and complete records of the Collateral,
including a record of any and all payments received and any and all credits
granted with respect to the Collateral and all other dealings with the
Collateral, in each case in a manner consistent with past practice. Upon request
by the Administrative Agent, Credit Parties shall mark their books and records
pertaining to the Collateral to evidence this Agreement and the Liens granted
hereby. If any Credit Party retains possession of any Chattel Paper or
Instruments with Administrative Agent's consent, such Chattel Paper and
Instruments shall, if requested by Administrative Agent, be marked with the
following legend: "This writing and the obligations evidenced or secured hereby
are subject to the security interest of General Electric Capital Corporation, as
Administrative Agent, for the benefit of Secured Parties."

          (b) Covenants Regarding Patent, Trademark and Copyright Collateral.

               (i) Credit Parties shall notify Administrative Agent promptly if
     they know or have reason to know that any application or registration
     relating to any material Patent, Trademark or Copyright (now or hereafter
     existing) may become abandoned or dedicated, or of any adverse
     determination or development (including the institution of, or any such
     determination or development in, any proceeding in the United States Patent
     and Trademark Office, the United States Copyright Office or any court)
     regarding any Credit Party's ownership of any material Patent, Trademark or
     Copyright, its right to register the same, or to keep and maintain the
     same.

               (ii) Promptly after any Credit Party, either itself or through
     the Administrative Agent, employee, licensee or designee, files an
     application for the registration of any Patent, Trademark or Copyright with
     the United States Patent and Trademark Office or the United States
     Copyright Office, Credit Party shall give Administrative Agent written
     notice of such filing and, upon request of Administrative Agent, Credit
     Party shall execute and deliver any and all Patent Security Agreements,
     Copyright Security Agreements or Trademark Security Agreements as
     Administrative Agent may request to evidence Administrative Agent's Lien on
     such Patent, Trademark or Copyright, and the General Intangibles of such
     Credit Party relating thereto or represented thereby.

               (iii) Credit Parties shall take all actions necessary or
     requested by Administrative Agent to maintain and pursue each application,
     to obtain the relevant registration and to maintain the registration of
     each of the Patents, Trademarks and


                                       65



     Copyrights (now or hereafter existing), including the filing of
     applications for renewal, affidavits of use, affidavits of
     noncontestability and opposition and interference and cancellation
     proceedings unless such Credit Party reasonably determines that such
     Patent, Trademark or Copyright Collateral is in no way material to the
     conduct of its business or operations,

               (iv) In the event that any of the Patent, Trademark or Copyright
     Collateral is infringed upon, or misappropriated or diluted by a third
     party, such Credit Party shall comply with Section 10.2(a)(ix) of this
     Agreement. Such Credit Party shall, unless such Credit Party reasonably
     determines that such Patent, Trademark or Copyright Collateral is in no way
     material to the conduct of its business or operations, promptly sue for
     infringement, misappropriation or dilution and to recover any and all
     damages for such infringement, misappropriation or dilution, and shall take
     such other actions as Administrative Agent shall deem appropriate under the
     circumstances to protect such Patent, Trademark or Copyright Collateral.

          (c) [Reserved].

          (d) Further Identification of Collateral. In addition to any other
requirements herein, Credit Parties will, if so requested by Administrative
Agent, furnish to Administrative Agent, as often as Administrative Agent
reasonably requests, statements and schedules further identifying and describing
the Collateral as Administrative Agent may reasonably request, all in such
detail as Administrative Agent may specify.

          (e) Notices. Credit Parties will advise Administrative Agent promptly,
in reasonable detail of any Lien or claim made or asserted against any of the
Collateral other than in respect of Permitted Liens.

          (f) Terminations; Amendments Not Authorized. Except to the extent
permitted by clause (g), each Credit Party acknowledges that it is not
authorized to file any financing statement or amendment or termination statement
with respect to any financing statement relating to the Collateral and filed
pursuant to the terms hereof without the prior written consent of Administrative
Agent and agrees that it will not do so without the prior written consent of
Administrative Agent, subject to such Credit Party's rights under Section
9-509(d)(2) of the Code.

          (g) Authorized Terminations and Subordinations. Administrative Agent
will promptly deliver to each Credit Party for filing or authorize each Credit
Party to prepare and file termination statements and releases in respect of any
sales, transfers, conveyances, assignments or other dispositions of Collateral
made in accordance with Section 6.8 of this Agreement. Administrative Agent
will, upon request of any Credit Party, expressly subordinate, in form and
substance reasonably satisfactory to the Administrative Agent the Liens granted
hereunder to any prior Lien permitted under Section 6.7 of this Agreement.

          (h) Motor Vehicles. Upon request, each Credit Party shall deliver to
Administrative Agent a motor vehicle certificate of title, if any, for all motor
vehicles from time


                                       66



to time owned by it and shall cause those title certificates to be filed (with
Administrative Agent's Lien noted thereon) in the appropriate state motor
vehicle filing office.

          (i) Pledged Collateral.

               (i) All certificates and all promissory notes and instruments
     evidencing the Pledged Collateral shall be delivered to and held by or on
     behalf of Administrative Agent, for itself and the benefit of Secured
     Parties, pursuant hereto. All Pledged Shares shall be accompanied by duly
     executed instruments of transfer or assignment in blank, all in form and
     substance satisfactory to Administrative Agent and all promissory notes or
     other instruments evidencing the Pledged Indebtedness shall be endorsed by
     the applicable Credit Party.

               (ii) Without the prior written consent of Administrative Agent,
     no Credit Party will sell, assign, transfer, pledge, or otherwise encumber
     any of its rights in or to the Pledged Collateral, or any unpaid dividends,
     interest or other distributions or payments with respect to the Pledged
     Collateral or grant a Lien in the Pledged Collateral, unless otherwise
     expressly permitted by this Agreement;

               (iii) Each Credit Party will, at its expense, promptly execute,
     acknowledge and deliver all such instruments and take all such actions as
     Administrative Agent from time to time may reasonably request in order to
     ensure to Administrative Agent and Secured Parties obtain the benefits of
     the Liens in and to the Pledged Collateral intended to be created by this
     Agreement, including the filing of any necessary Code financing statements,
     which may be filed by Administrative Agent with or (to the extent permitted
     by law) without the signature of Credit Party, and will cooperate with
     Administrative Agent, at such Credit Party's expense, in obtaining all
     necessary approvals and making all necessary filings under federal, state,
     local or foreign law in connection with such Liens or any sale or transfer
     of the Pledged Collateral; provided that Administrative Agent shall not,
     prior to the occurrence of any Event of Default, require any actions to be
     taken with respect to (i) those assets as to which Administrative Agent
     shall determine, in its reasonable discretion, that the cost of obtaining
     such security interest or taking such action are excessive in relation to
     the benefit to Lenders afforded thereby, (ii) property the acquisition or
     construction of which was financed through Indebtedness (existing as of the
     Closing Date or as permitted by Section 6.3(a) of this Agreement), and
     (iii) all property to the extent that the granting of such a security
     interest or taking such action would constitute a breach or violation of a
     valid and effective restriction in favor of a third party (including,
     without limitation, mandatory consent rights), or give rise to any
     indemnification obligations or any right to terminate or commence the
     exercise of remedies under such restrictions;

               (iv) Each Credit Party has and will defend the title to the
     Pledged Collateral and the Liens of Administrative Agent in the Pledged
     Collateral against the claim of any Person (other than the holder of a
     Permitted Lien) and will maintain and preserve such Liens (it being
     understood that nothing in this clause (iv) will prevent such Credit Party
     from disposing of Pledged Collateral as otherwise permitted by Section
     6.8); and


                                       67



               (v) Each Credit Party will, upon obtaining ownership of any
     additional Stock of a Pledged Entity or promissory notes or instruments
     representing Pledged Indebtedness or Stock or promissory notes or
     instruments otherwise required to be pledged to Administrative Agent
     pursuant to any of the Loan Documents, which Stock, notes or instruments
     are not already Pledged Collateral, promptly (and in any event within five
     (5) Business Days) deliver to Administrative Agent a Pledge Amendment, duly
     executed by such Credit Party, in substantially the form of Exhibit H
     hereto (a "Pledge Amendment") in respect of any such additional Stock,
     notes or instruments, pursuant to which such Credit Party shall pledge to
     Administrative Agent all of such additional Stock, notes and instruments;
     provided that such Credit Party shall be required to do the foregoing with
     respect to any such promissory note or instrument only if requested to do
     so by the Administrative Agent pursuant to Section 10.2(a)(ii) of this
     Agreement. Credit Party hereby authorizes Administrative Agent to attach
     each Pledge Amendment to this Agreement and agrees that all Pledged Shares
     and Pledged Indebtedness listed on any Pledge Amendment delivered to
     Administrative Agent shall for all purposes hereunder be considered Pledged
     Collateral. This clause (v) shall not apply to any Excluded Equity.

          10.5 Performance by Administrative Agent of the Credit Parties'
Obligations. If any Credit Party fails to perform or comply with any of its
agreements contained herein and the Administrative Agent, as provided for by the
terms of this Agreement, shall itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the expenses of the
Administrative Agent incurred in connection with such performance or compliance,
together with interest thereon at the rate then in effect in respect of Term
Loan C, shall be payable by such Credit Party to the Administrative Agent on
demand and shall constitute Obligations secured by the Collateral. Performance
of such Credit Party's obligations as permitted under this Section 10.5 shall in
no way constitute a violation of the automatic stay provided by section 362 of
the Bankruptcy Code and each Credit Party hereby waives applicability thereof.
Moreover, the Administrative Agent shall in no way be responsible for the
payment of any costs incurred in connection with preserving or disposing of
Collateral pursuant to section 506(c) of the Bankruptcy Code and the Collateral
may not be charged for the incurrence of any such cost.

          10.6 Limitation on Administrative Agent's duty in Respect of
Collateral. The Administrative Agent and each Secured Party shall use reasonable
care with respect to the Collateral in its possession or under its control.
Neither the Administrative Agent nor any Secured Party shall have any other duty
as to any Collateral in its possession or control or in the possession or
control of any agent or nominee of the Administrative Agent or such Secured
Party, or any income thereon or as to the preservation of rights against prior
parties or any other rights pertaining thereto.

          10.7 Remedies; Rights Upon Default.

          (a) In addition to all other rights and remedies granted to it under
the other Loan Documents and under any other instrument or agreement securing,
evidencing or relating to any of the Secured Obligations, if any Event of
Default shall have occurred and be continuing, the Administrative Agent may
exercise all rights and remedies of a secured party under the Code. Without
limiting the generality of the foregoing, each Credit Party expressly agrees
that in any


                                       68



such event the Administrative Agent, without demand of performance or other
demand, advertisement or notice of any kind (except the notice required by the
Interim Order or Final Order or the notice specified below of time and place of
public or private sale) to or upon such Credit Party or any other Person (all
and each of which demands, advertisements and notices are hereby expressly
waived to the maximum extent permitted by the Code and other applicable law),
may, to the maximum extent permitted by law, forthwith enter upon the premises
of such Credit Party where any Collateral is located through self-help, without
judicial process, without first obtaining a final judgment or giving such Credit
Party or any other Person notice and opportunity for a hearing on the
Administrative Agent's claim or action and may collect, receive, assemble,
process, appropriate and realize upon the Collateral, or any part thereof, and
may forthwith sell, lease, license, assign, give an option or options to
purchase, or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at a public or
private sale or sales, at any exchange at such prices as it may deem acceptable,
for cash or on credit or for future delivery without assumption of any credit
risk. The Administrative Agent or any Secured Party shall have the right upon
any such public sale or sales and, to the extent permitted by law, upon any such
private sale or sales, to purchase for the benefit of Secured Parties, the whole
or any part of said Collateral so sold, free of any right or equity of
redemption, which equity of redemption each Credit Party hereby releases. Such
sales may be adjourned and continued from time to time with or without notice.
The Administrative Agent shall have the right to conduct such sales on any
Credit Party's premises or elsewhere and shall have the right to use any Credit
Party's premises without charge for such time or times as the Administrative
Agent may deem necessary or advisable. EACH CREDIT PARTY HEREBY IRREVOCABLY
CONSTITUTES AND APPOINTS ADMINISTRATIVE AGENT AS THE PROXY AND ATTORNEY-IN-FACT
OF SUCH CREDIT PARTY WITH RESPECT TO THE PLEDGED COLLATERAL, INCLUDING THE RIGHT
TO VOTE THE PLEDGED SHARES, WITH FULL POWER OF SUBSTITUTION TO DO SO. THE
APPOINTMENT OF ADMINISTRATIVE AGENT AS PROXY AND ATTORNEY-IN-FACT IS COUPLED
WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE TERMINATION DATE. IN
ADDITION TO THE RIGHT TO VOTE THE PLEDGED SHARES, THE APPOINTMENT OF
ADMINISTRATIVE AGENT AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO
EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF
THE PLEDGED SHARES WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN
CONSENTS OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT
SUCH MEETINGS). SUCH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE
NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY PLEDGED SHARES ON THE
RECORD BOOKS OF THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER OF THE
PLEDGED SHARES OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE OF AN EVENT
OF DEFAULT. NOTWITHSTANDING THE FOREGOING, (X) ADMINISTRATIVE AGENT SHALL NOT
HAVE ANY DUTY TO EXERCISE ANY SUCH RIGHT OR TO PRESERVE THE SAME AND SHALL NOT
BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO AND (Y)
ADMINISTRATIVE AGENT SHALL NOT EXERCISE ANY SUCH RIGHT WITH RESPECT TO ANY
REGULATED SUBSIDIARY UNLESS ANY AND ALL REGULATORY APPROVALS REQUIRED UNDER
APPLICABLE LAW SHALL HAVE BEEN OBTAINED.


                                       69



          (b) If any Event of Default shall have occurred and be continuing,
each Credit Party further agrees, at Administrative Agent's request, to assemble
the Collateral and make it available to Administrative Agent at a place or
places designated by Administrative Agent which are reasonably convenient to
Administrative Agent and such Credit Party, whether at such Credit Party's
premises or elsewhere. Until Administrative Agent is able to effect a sale,
lease, or other disposition of Collateral, the Administrative Agent shall have
the right to hold or use Collateral, or any part thereof, to the extent that it
deems appropriate for the purpose of preserving Collateral or its value or for
any other purpose deemed appropriate by Administrative Agent. The Administrative
Agent shall have no obligation to any Credit Party to maintain or preserve the
rights of Credit Party as against third parties with respect to Collateral while
Collateral is in the possession of the Administrative Agent. The Administrative
Agent may, if it so elects, seek the appointment of a receiver or keeper to take
possession of Collateral and to enforce any of the Administrative Agent's
remedies (for the benefit of Secured Parties), with respect to such appointment
without prior notice or hearing as to such appointment. The Administrative Agent
shall deposit the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale to the Cash Collateral Account and such net
proceeds shall be applied in accordance with Section 1.3. To the maximum extent
permitted by applicable law, each Credit Party waives all claims, damages, and
demands against the Administrative Agent or any Secured Party arising out of the
repossession, retention or sale of the Collateral except such as arise solely
out of the gross negligence or willful misconduct of the Administrative Agent or
such Secured Party as finally determined by a court of competent jurisdiction.
Each Credit Party agrees that ten (10) days prior notice by Administrative Agent
of the time and place of any public sale or of the time after which a private
sale may take place is reasonable notification of such matters. Credit Parties
shall remain liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay all Secured Obligations,
including any attorneys' fees and other expenses incurred by Administrative
Agent or any Secured Party to collect such deficiency.

          (c) Except as otherwise specifically provided herein, each Credit
Party hereby waives presentment, demand, protest or any notice (to the maximum
extent permitted by applicable law) of any kind in connection with this
Agreement or any Collateral.

          (d) To the extent that applicable law imposes duties on the
Administrative Agent to exercise remedies in a commercially reasonable manner,
each Credit Party acknowledges and agrees that it is not commercially
unreasonable for the Administrative Agent (i) to fail to incur expenses
reasonably deemed significant by the Administrative Agent to prepare Collateral
for disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition, (ii) to fail to
obtain third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by other law, to fail to obtain governmental or third
party consents for the collection or disposition of Collateral to be collected
or disposed of, (iii) to fail to exercise collection remedies against Account
Debtors or other Persons obligated on Collateral or to remove Liens on or any
adverse claims against Collateral, (iv) to exercise collection remedies against
Account Debtors and other Persons obligated on Collateral directly or through
the use of collection agencies and other collection specialists, (v) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to
contact other Persons, whether or not in the same business as the Credit
Parties, for expressions of interest in acquiring


                                       70



all or any portion of such Collateral, (vii) to hire one or more professional
auctioneers to assist in the disposition of Collateral, whether or not the
Collateral is of a specialized nature, (viii) to dispose of Collateral by
utilizing internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capacity of doing so, or
that match buyers and sellers of assets, (ix) to dispose of assets in wholesale
rather than retail markets, (x) to disclaim disposition warranties, such as
title, possession or quiet enjoyment, (xi) to purchase insurance or credit
enhancements to insure the Administrative Agent against risks of loss,
collection or disposition of Collateral or to provide to the Administrative
Agent a guaranteed return from the collection or disposition of Collateral, or
(xii) to the extent deemed appropriate by the Administrative Agent, to obtain
the services of other brokers, investment bankers, consultants and other
professionals to assist the Administrative Agent in the collection or
disposition of any of the Collateral. Each Credit Party acknowledges that the
purpose of this Section 10.7(d) is to provide non-exhaustive indications of what
actions or omissions by the Administrative Agent would not be commercially
unreasonable in the Administrative Agent's exercise of remedies against the
Collateral and that other actions or omissions by the Administrative Agent shall
not be deemed commercially unreasonable solely on account of not being indicated
in this Section 10.7(d). Without limitation upon the foregoing, nothing
contained in this Section 10.7(d) shall be construed to grant any rights to any
Credit Party or to impose any duties on the Administrative Agent that would not
have been granted or imposed by this Agreement or by applicable law in the
absence of this Section 10.7(d).

          (e) Neither the Administrative Agent nor any Secured Party shall be
required to make any demand upon, or pursue or exhaust any of their rights or
remedies against, any Credit Party, any other obligor, guarantor, pledgor or any
other Person with respect to the payment of the Secured Obligations or to pursue
or exhaust any of their rights or remedies with respect to any Collateral
therefore or any direct or indirect guarantee thereof. Neither the
Administrative Agent nor the Secured Parties shall be required to marshal the
Collateral or any guarantee of the Secured Obligations or to resort to the
Collateral or any such guarantee in any particular order, and all of its and
their rights hereunder or under any other Loan Document shall be cumulative. To
the extent it may lawfully do so, each Credit Party absolutely and irrevocably
waives and relinquishes the benefit and advantage of, and covenants not to
assert against the Administrative Agent or any Secured Party, any valuation,
stay, appraisement, extension, redemption or similar laws and any and all rights
or defenses it may have as a surety now or hereafter existing which, but for
this provision, might be applicable to the sale of any Collateral made under the
judgment, order or decree of any court, or privately under the power of sale
conferred by this Agreement, or otherwise.

          (f) Upon the occurrence of an Event of Default and during the
continuation of such Event of Default, and concurrently with written notice to
Credit Parties, Administrative Agent is hereby authorized and empowered to
transfer and register in its name or in the name of its nominee the whole or any
part of the Pledged Collateral, to exchange certificates or instruments
representing or evidencing Pledged Collateral for certificates or instruments of
smaller or larger denominations, to exercise the voting and all other rights as
a holder with respect thereto, to collect and receive all cash dividends,
interest, principal and other distributions made thereon, to sell in one or more
sales after ten (10) days' notice of the time and place of any public sale or of
the time at which a private sale is to take place (which notice Credit Parties
agree is commercially reasonable) the whole or any part of the Pledged
Collateral and to


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otherwise act with respect to the Pledged Collateral as though Administrative
Agent was the outright owner thereof in each case provided that no such action
shall be taken with respect to the Stock of any Regulated Subsidiary unless any
and all regulatory approvals required under applicable law shall have been
obtained. Any sale shall be made at a public or private sale at Administrative
Agent's place of business, or at any place to be named in the notice of sale,
either for cash or upon credit or for future delivery at such price as
Administrative Agent may deem fair, and Administrative Agent may be the
purchaser of the whole or any part of the Pledged Collateral so sold and hold
the same thereafter in its own right free from any claim of such Credit Party or
any right of redemption. Each sale shall be made to the highest bidder, but
Administrative Agent reserves the right to reject any and all bids at such sale
which, in its discretion, it shall deem inadequate. Demands of performance,
except as otherwise herein specifically provided for, notices of sale,
advertisements and the presence of property at sale are hereby waived and any
sale hereunder may be conducted by an auctioneer or any officer or agent of
Administrative Agent.

          (g) If, at the original time or times appointed for the sale of the
whole or any part of the Pledged Collateral, the highest bid, if there be but
one sale, shall be inadequate to discharge in full all the Secured Obligations,
or if the Pledged Collateral has been offered for sale in lots, and if at any of
such sales, the highest bid for the lot offered for sale would indicate to
Administrative Agent, in its discretion, that the proceeds of the sales of the
whole of the Pledged Collateral would be unlikely to be sufficient to discharge
all the Secured Obligations, the Administrative Agent may, on one or more
occasions and in its sole discretion, postpone effectuating any of said sales by
public announcement at the time of sale or the time of previous postponement of
sale, and no other notice of such postponement or postponements of sale need be
given, any other notice being hereby waived; provided, however, that any sale or
sales made after such postponement shall be after ten (10) days' notice to such
Credit Party.

          (h) If, at any time when Administrative Agent in its sole discretion
determines, following the occurrence and during the continuance of an Event of
Default, that, in connection with any actual or contemplated exercise of its
rights (when permitted under this Section 10.7(h) to sell the whole or any part
of the Pledged Shares hereunder, it is necessary or advisable to effect a public
registration of all or part of the Pledged Collateral pursuant to the Securities
Act of 1933, as amended (or any similar statute then in effect) (the "Act"),
such Credit Party shall, in an expeditious manner, cause the Pledged Entities
to:

               (i) Prepare and file with the Securities and Exchange Commission
     (the "Commission") a registration statement with respect to the Pledged
     Shares and in good faith use commercially reasonable efforts to cause such
     registration statement to become and remain effective;

               (ii) Prepare and file with the Commission such amendments and
     supplements to such registration statement and the prospectus used in
     connection therewith as may be necessary to keep such registration
     statement effective and to comply with the provisions of the Act with
     respect to the sale or other disposition of the Pledged Shares covered by
     such registration statement whenever Administrative Agent shall desire to
     sell or otherwise dispose of the Pledged Shares;


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               (iii) Furnish to Administrative Agent such numbers of copies of a
     prospectus and a preliminary prospectus, in conformity with the
     requirements of the Act, and such other documents as Administrative Agent
     may request in order to facilitate the public sale or other disposition of
     the Pledged Shares by Administrative Agent;

               (iv) Use commercially reasonable efforts to register or qualify
     the Pledged Shares covered by such registration statement under such other
     securities or blue sky laws of such jurisdictions within the United States
     and Puerto Rico as Administrative Agent shall request, and do such other
     reasonable acts and things as may be required of it to enable
     Administrative Agent to consummate the public sale or other disposition in
     such jurisdictions of the Pledged Shares by Administrative Agent;

               (v) Furnish, at the request of Administrative Agent, on the date
     that shares of the Pledged Collateral are delivered to the underwriters for
     sale pursuant to such registration or, if the security is not being sold
     through underwriters, on the date that the registration statement with
     respect to such Pledged Shares becomes effective, (A) an opinion, dated
     such date, of the independent counsel representing such registrant for the
     purposes of such registration, addressed to the underwriters, if any, and
     in the event the Pledged Shares are not being sold through underwriters,
     then to Administrative Agent, in customary form and covering matters of the
     type customarily covered in such legal opinions; and (B) a comfort letter,
     dated such date, from the independent certified public accountants of such
     registrant, addressed to the underwriters, if any, and in the event the
     Pledged Shares are not being sold through underwriters, then to
     Administrative Agent, in a customary form and covering matters of the type
     customarily covered by such comfort letters and as the underwriters or
     Administrative Agent shall reasonably request. The opinion of counsel
     referred to above shall additionally cover such other legal matters with
     respect to the registration in respect of which such opinion is being given
     as Administrative Agent may reasonably request. The letter referred to
     above from the independent certified public accountants shall additionally
     cover such other financial matters (including information as to the period
     ending not more than five (5) Business Days prior to the date of such
     letter) with respect to the registration in respect of which such letter is
     being given as Administrative Agent may reasonably request; and

               (vi) Otherwise use commercially reasonable efforts to comply with
     all applicable rules and regulations of the Commission, and make available
     to its security holders, as soon as reasonably practicable but not later
     than 18 months after the effective date of the registration statement, an
     earnings statement covering the period of at least 12 months beginning with
     the first full month after the effective date of such registration
     statement, which earnings statement shall satisfy the provisions of Section
     11(a) of the Act.

          (i) All expenses incurred in complying with Section 10.7(h) hereof,
including, without limitation, all registration and filing fees (including all
expenses incident to filing with the National Association of Securities Dealers,
Inc.), printing expenses, fees and disbursements of counsel for the registrant,
the fees and expenses of counsel for Administrative Agent, expenses of the
independent certified public accountants (including any special audits


                                       73



incident to or required by any such registration) and expenses of complying with
the securities or blue sky laws or any jurisdictions, shall be paid by Credit
Parties.

          (j) If, at any time when Administrative Agent shall determine to
exercise its right to sell the whole or any part of the Pledged Collateral
hereunder, such Pledged Collateral or the part thereof to be sold shall not, for
any reason whatsoever, be effectively registered under the Act, Administrative
Agent may, in its discretion (subject only to applicable requirements of law),
sell such Pledged Collateral or part thereof by private sale in such manner and
under such circumstances as Administrative Agent may deem necessary or
advisable, but subject to the other requirements of this Section 10.7, and shall
not be required to effect such registration or to cause the same to be effected.
Without limiting the generality of the foregoing, in any such event,
Administrative Agent in its discretion (x) may, in accordance with applicable
securities laws, proceed to make such private sale notwithstanding that a
registration statement for the purpose of registering such Pledged Collateral or
part thereof could be or shall have been filed under said Act (or similar
statute), (y) may approach and negotiate with a single possible purchaser to
effect such sale, and (z) may restrict such sale to a purchaser who is an
accredited investor under the Act and who will represent and agree that such
purchaser is purchasing for its own account, for investment and not with a view
to the distribution or sale of such Pledged Collateral or any part thereof. In
addition to a private sale as provided above in this Section 10.7, if any of the
Pledged Collateral shall not be freely distributable to the public without
registration under the Act (or similar statute) at the time of any proposed sale
pursuant to this Section 10.7, then Administrative Agent shall not be required
to effect such registration or cause the same to be effected but, in its
discretion (subject only to applicable requirements of law), may require that
any sale hereunder (including a sale at auction) be conducted subject to
restrictions:

               (i) as to the financial sophistication and ability of any Person
     permitted to bid or purchase at any such sale;

               (ii) as to the content of legends to be placed upon any
     certificates representing the Pledged Collateral sold in such sale,
     including restrictions on future transfer thereof;

               (iii) as to the representations required to be made by each
     Person bidding or purchasing at such sale relating to that Person's access
     to financial information about such Credit Party and such Person's
     intentions as to the holding of the Pledged Collateral so sold for
     investment for its own account and not with a view to the distribution
     thereof; and

               (iv) as to such other matters as Administrative Agent may, in its
     discretion, deem necessary or appropriate in order that such sale
     (notwithstanding any failure so to register) may be effected in compliance
     with the Bankruptcy Code and other laws affecting the enforcement of
     creditors' rights and the Act and all applicable state securities laws.

          (k) Each Credit Party recognizes that Administrative Agent may be
unable to effect a public sale of any or all the Pledged Collateral and may be
compelled to resort to one or more private sales thereof in accordance with
clause (j) above. Each Credit Party also


                                       74



acknowledges that any such private sale may result in prices and other terms
less favorable to the seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall not
be deemed to have been made in a commercially unreasonable manner solely by
virtue of such sale being private. Administrative Agent shall be under no
obligation to delay a sale of any of the Pledged Collateral for the period of
time necessary to permit the Pledged Entity to register such securities for
public sale under the Act, or under applicable state securities laws, even if
such Credit Party and the Pledged Entity would agree to do so.

          (l) Each Credit Party agrees to the maximum extent permitted by
applicable law that following the occurrence and during the continuance of an
Event of Default it will not at any time plead, claim or take the benefit of any
appraisal, valuation, stay, extension, moratorium or redemption law now or
hereafter in force in order to prevent or delay the enforcement of this
Agreement, or the absolute sale of the whole or any part of the Pledged
Collateral or the possession thereof by any purchaser at any sale hereunder, and
each Credit Party waives the benefit of all such laws to the extent it lawfully
may do so. Each Credit Party agrees that it will not interfere with any right,
power and remedy of Administrative Agent provided for in this Agreement or now
or hereafter existing at law or in equity or by statute or otherwise, or the
exercise or beginning of the exercise by Administrative Agent of any one or more
of such rights, powers or remedies. No failure or delay on the part of
Administrative Agent to exercise any such right, power or remedy and no notice
or demand which may be given to or made upon Credit Parties by Administrative
Agent with respect to any such remedies shall operate as a waiver thereof, or
limit or impair Administrative Agent's right to take any action or to exercise
any power or remedy hereunder, without notice or demand, or prejudice its rights
as against any Credit Party in any respect.

          (m) Each Credit Party further agrees that a breach of any of the
covenants contained in this Section 10.7 will cause irreparable injury to
Administrative Agent, that Administrative Agent shall have no adequate remedy at
law in respect of such breach and, as a consequence, agrees that each and every
covenant contained in this Section 10.7 shall be specifically enforceable
against the Credit Parties, and each Credit Party hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that the Secured Obligations are not then due and
payable in accordance with the agreements and instruments governing and
evidencing such Obligations.

          (n) To the extent that any rights and remedies under this Section 10.7
would otherwise be in violation of the automatic stay of section 362 of the
Bankruptcy Code, such stay shall be deemed modified, as set forth in the Interim
Order or Final Order, as applicable, to the extent necessary to permit the
Administrative Agent to exercise such rights and remedies.

          10.8 The Administrative Agent's Appointment as Attorney-in-Fact.

          (a) On the Closing Date each Credit Party shall execute and deliver to
Administrative Agent a power of attorney (the "Power of Attorney") substantially
in the form attached hereto as Exhibit A. The power of attorney granted pursuant
to the Power of Attorney is a power coupled with an interest and shall be
irrevocable until the Termination Date. The powers conferred on Administrative
Agent, for the benefit of Secured Parties, under the Power of


                                       75



Attorney are solely to protect Administrative Agent's interests (for the benefit
of Secured Parties) in the Collateral and shall not impose any duty upon the
Administrative Agent or any Secured Party to exercise any such powers.
Administrative Agent agrees that (a) except for the powers granted in clause (h)
of the Power of Attorney, it shall not exercise any power or authority granted
under the Power of Attorney unless an Event of Default has occurred and is
continuing, and (b) Administrative Agent shall account for any moneys received
by the Administrative Agent in respect of any foreclosure on or disposition of
Collateral pursuant to the Power of Attorney provided that neither the
Administrative Agent nor any Secured Party shall have any duty as to any
Collateral, and Administrative Agent and the Secured Parties shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers. NEITHER THE ADMINISTRATIVE AGENT, THE SECURED PARTIES
NOR THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES SHALL BE RESPONSIBLE TO ANY CREDIT PARTY FOR ANY ACT OR FAILURE
TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES
ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS
FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE,
EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

          (b) The Administrative Agent agrees that it will forbear from
exercising the power of attorney or any rights granted to the Administrative
Agent pursuant to this Section 10.8, except upon the occurrence or during the
continuation of an Event of Default. The Credit Parties hereby ratify, to the
extent permitted by law, all that said attorneys shall lawfully do or cause to
be done by virtue hereof. Exercise by the Administrative Agent of the powers
granted hereunder is not a violation of the automatic stay provided by section
362 of the Bankruptcy Code and each Credit Party waives applicability thereof.
The power of attorney granted pursuant to this Section 10.8 is a power coupled
with an interest and shall be irrevocable until the Obligations are indefeasibly
paid in full.

          (c) The powers conferred on the Administrative Agent hereunder are
solely to protect the Administrative Agent's and the Lenders' interests in the
Collateral and shall not impose any duty upon it to exercise any such powers.
The Administrative Agent shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers and neither it nor any of
its officers, directors, employees or agents shall be responsible to any Credit
Party for any act or failure to act, except for its own gross negligence or
willful misconduct.

          (d) Each Credit Party also authorizes the Administrative Agent, at any
time and from time to time upon the occurrence and during the continuation of
any Event of Default or as otherwise expressly permitted by this Agreement, (i)
to communicate in its own name or the name of its Subsidiaries with any party to
any Contract with regard to the assignment of the right, title and interest of
such Credit Party in and under the Contracts hereunder and other matters
relating thereto and (ii) to execute any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.

          (e) All Obligations shall constitute, in accordance with section
364(c)(1) of the Bankruptcy Code, claims against the Borrower and each Credit
Party in their respective


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Cases which are administrative expense claims having priority over any all
administrative expenses of the kind specified in sections 503(b) or 507(b) of
the Bankruptcy Code.

          10.9 [Reserved].

          10.10 Intercreditor Issues.

          Notwithstanding anything herein to the contrary, for so long as the
Post-Petition Skymiles Facility Documents are in effect, if any Credit Party is
in compliance with any requirements relating to SkyMiles Collateral imposed by
the Post-Petition Skymiles Collateral Documents which are equivalent to
requirements set forth in this Agreement (other than creation and, with respect
to Collateral which is not Control Collateral (as defined below), perfection, of
any Lien hereunder), such Credit Party need not comply with (and shall be deemed
to have satisfied) such requirements of this Agreement. Without limiting the
foregoing:

          (a) any covenant hereunder requiring (or any representation or
warranty hereunder to the extent that it would have the effect of requiring) the
delivery of possession or control to the Administrative Agent of Control
Collateral that is SkyMiles Collateral shall be deemed to have been satisfied
(or such representation and warranty shall be deemed to be true) if such
possession or control shall have been delivered to SkyMiles Agent as provided in
the Post-Petition Skymiles Facility Documents (as used herein, "Control
Collateral" shall mean any Collateral (including, without limitation, any
Collateral consisting of any Deposit Account, Investment Property,
Letter-of-Credit Rights, electronic chattel paper or money) as to which a Lien
therein may be perfected through possession or other control by any secured
party or any agent therefor);

          (b) if any provision hereof shall require any Credit Party to take any
action with respect to any SkyMiles Collateral if requested to do so by the
Administrative Agent, such Credit Party shall be required to take such action
only if and to the extent that the SkyMiles Agent shall have requested the
Credit Party to take such action pursuant to the corresponding provision of the
Post-Petition Skymiles Facility Documents;

          (c) if any provision hereof shall require any Credit Party to take any
action with respect to any SkyMiles Collateral unless the Administrative Agent
shall have otherwise provided its consent or a waiver, such Credit Party shall
not be required to take such action if and to the extent that the SkyMiles Agent
shall have provided its consent or a waiver to the Credit Party not taking such
action pursuant to the corresponding provision of the Post-Petition Skymiles
Facility Documents; and

          (d) if any provision hereof permits any Credit Party to take any
action with respect to any SkyMiles Collateral only upon receiving the
Administrative Agent's consent to do so, the Administrative Agent shall be
deemed to have provided such consent if and to the extent that the SkyMiles
Agent shall have provided its consent to such Credit Party taking such action
pursuant to the corresponding provision of the Post-Petition Skymiles Facility
Documents.


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          10.11 Release of Collateral.

          (a) The Liens granted pursuant to this Agreement shall automatically
terminate, and all the Collateral shall be automatically released, without
further action by the Administrative Agent and without any further notice or
consent to or of any Secured Party, on the Termination Date.

          (b) Immediately upon (i) any sale, transfer, conveyance, assignment or
other disposition by any Credit Party of any Collateral permitted by this
Agreement (or pursuant to a valid waiver or consent to any transaction otherwise
prohibited by this Agreement), (ii) any part of the Collateral becoming subject
to a Lien permitted by Section 6.7(f) or (iii) any Pledged Collateral being
cancelled, replaced or repaid in accordance with the terms of this Agreement,
such Collateral shall be automatically released from the security interest
granted pursuant to this Agreement and the Lien on such Collateral in favor of
the Administrative Agent, for itself and for the benefit of the Secured Parties,
shall automatically terminate (and, if such Collateral consists of all of the
equity interest in a Subsidiary Guarantor, such Subsidiary Guarantor shall be
released from its Guaranty), in each case without further action by the
Administrative Agent and without any further notice or consent to or of any
Secured Party.

          (c) At the request of the Borrower, the Administrative Agent shall,
and each of the Secured Parties hereby authorizes and directs the Administrative
Agent (without any further notice or consent to or of any Secured Party) to,
promptly release or subordinate, as requested by the holders of any Lien
permitted by Section 6.7(a), (c), (f), (i), (j) (subject, in the case of Amex,
to the Skymiles Intercreditor Agreement), (n), (o), (q), (r) or (s), any part of
the Collateral that is subject to a Lien permitted by such section.

          (d) (d) At the request of the Borrower, the Administrative Agent
shall, and each of the Secured Parties hereby authorizes and directs the
Administrative Agent (without further notice or consent to or of any Secured
Party) to, execute and deliver or file such termination or partial release
statements and take such other actions (including return of Collateral) as are
necessary to terminate, release or subordinate Liens pursuant to this Section
10.11 promptly upon the effectiveness of any such termination, release or
subordination. The Administrative Agent and the Secured Parties hereby
acknowledges and agree that the Credit Parties may use the Collateral to the
extent permitted under the Credit Agreement.

11. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF ADMINISTRATIVE AGENT

          11.1 Assignment and Participations.

          (a) Right to Assign. Each Lender may sell, transfer, negotiate or
assign all or a portion of its rights and obligations hereunder (including all
or a portion of its Commitments and its rights and obligations with respect to
Loans) to (i) any existing Lender, (ii) any Affiliate or Approved Fund of any
existing Lender or (iii) any other Person acceptable (which acceptance shall not
be unreasonably withheld or delayed) to the Administrative Agent and, as long as
no Event of Default is continuing, the Borrower; provided, that (x) such Sales
do not have to be ratable between the Term Loans but must be ratable among the
obligations owing to and owed


                                       78



by such Lender with respect to a Term Loan and (y) for each Term Loan, the
aggregate outstanding principal amount (determined as of the effective date of
the applicable Assignment) of the Loans and Commitments subject to any such Sale
shall be an integral multiple of $1,000,000, unless such Sale is made to an
existing Lender or an Affiliate or Approved Fund of any existing Lender, is of
the assignor's (together with its Affiliates and Approved Funds) entire interest
in such Term Loan or is made with the prior consent of the Borrower and the
Administrative Agent; provided, further, that the consent of the Administrative
Agent shall not be required for any assignment by any Arranger (or any Affiliate
or Related Person of such Arranger) of the Commitments or Loans held on the
Closing Date by such Person to the extent such assignment is made as part of the
primary syndication of the applicable Term Loan.

          (b) Procedure. The parties to each Sale made in reliance on clause (a)
above (other than those described in clause (e) below) shall execute and deliver
to the Administrative Agent (which shall keep a copy thereof) an Assignment,
together with any existing Note subject to such Sale (or any affidavit of loss
therefor acceptable to the Administrative Agent), any Certificates of Exemption
required to be delivered pursuant to Section 1.13 (which shall also be delivered
to Borrower) and, except with respect to any assignment by any Arranger (or any
Affiliate or Related Person of such Arranger) of the Commitments or Loans held
on the Closing Date by such Person to the extent such assignment is made as part
of the primary syndication of the applicable Term Loan, payment by the assignee
of an assignment fee in the amount of $3,500. Upon receipt of all the foregoing,
and conditioned upon such receipt and upon the Administrative Agent consenting
to such Assignment, from and after the effective date specified in such
Assignment, the Administrative Agent shall record or cause to be recorded in the
Loan Account the information contained in such Assignment.

          (c) Effectiveness. Effective upon the entry of such record in the Loan
Account, (i) such assignee shall become a party hereto and, to the extent that
rights and obligations under the Loan Documents have been assigned to such
assignee pursuant to such Assignment, shall have the rights and obligations of a
Lender, (ii) any applicable Note shall be transferred to such assignee through
such entry and (iii) the assignor thereunder shall, to the extent that rights
and obligations under this Agreement have been assigned by it pursuant to such
Assignment, relinquish its rights (except for those surviving the termination of
the Commitments and the payment in full of the Obligations) and be released from
its obligations under the Loan Documents, other than those relating to events or
circumstances occurring prior to such assignment (and, in the case of an
Assignment covering all or the remaining portion of an assigning Lender's rights
and obligations under the Loan Documents, such Lender shall cease to be a party
hereto.

          (d) Grant of Security Interests. In addition to the other rights
provided in this Section 11.1, each Lender may grant a security interest in, or
otherwise assign as collateral, any of its rights under this Agreement, whether
now owned or hereafter acquired (including rights to payments of principal or
interest on the Loans), to (A) any federal reserve bank (pursuant to Regulation
A of the Federal Reserve Board), without notice to the Administrative Agent or
(B) any holder of, or trustee for the benefit of the holders of, such Lender's
Securities by notice to the Administrative Agent; provided, that no such holder
or trustee, whether because of such grant or assignment or any foreclosure
thereon (unless such foreclosure is made through


                                       79



an assignment in accordance with clause (b) above), shall be entitled to any
rights of such Lender hereunder and no such Lender shall be relieved of any of
its obligations hereunder.

          (e) Participants and SPVs. In addition to the other rights provided in
this Section 11.1, each Lender may, (x) with notice to the Administrative Agent,
grant to an SPV the option to make all or any part of any Loan that such Lender
would otherwise be required to make hereunder (and the exercise of such option
by such SPV and the making of Loans pursuant thereto shall satisfy the
obligation of such Lender to make such Loans hereunder) and such SPV may assign
to such Lender the right to receive payment with respect to any Obligation and
(y) without notice to or consent from the Administrative Agent or the Borrower,
sell participations to one or more Persons in or to all or a portion of its
rights and obligations under the Loan Documents; provided, that, whether as a
result of any term of any Loan Document or of such grant or participation, (i)
no such SPV or participant shall have a commitment, or be deemed to have made an
offer to commit, to make Loans hereunder, and, except as provided in the
applicable option agreement, none shall be liable for any obligation of such
Lender hereunder, (ii) such Lender's rights and obligations, and the rights and
obligations of the Credit Parties and the Secured Parties towards such Lender,
under any Loan Document shall remain unchanged and each other party hereto shall
continue to deal solely with such Lender, which shall remain the holder of the
Obligations in the Register, except that (A) each such participant and SPV shall
be entitled to the benefit of Section 1.11, Section 1.13 and Section 1.14, but,
in the case of Section 1.13, only to the extent Borrower and the Administrative
Agent receive a Certificate of Exemption with respect to any such participant or
SPV that is a Foreign Person and in each such case only to the extent of any
amount to which such Lender would be entitled in the absence of any such grant
or participation and (B) each such SPV may receive other payments that would
otherwise be made to such Lender with respect to Loans funded by such SPV to the
extent provided in the applicable option agreement and set forth in a notice
provided to the Administrative Agent by such SPV and such Lender; provided, that
in no case (including pursuant to clause (A) or (B) above) shall an SPV or
participant have the right to enforce any of the terms of any Loan Document, and
(iii) the consent of such SPV or participant shall not be required (either
directly, as a restraint on such Lender's ability to consent hereunder or
otherwise) for any amendments, waivers or consents with respect to any Loan
Document or to exercise or refrain from exercising any powers or rights such
Lender may have under or in respect of the Loan Documents (including the right
to enforce or direct enforcement of the Obligations), except for those described
in clauses (viii)(B) and (viii)(C) of Section 13.2(a) with respect to amounts,
or dates fixed for payment of amounts, to which such participant or SPV would
otherwise be entitled and, in the case of participants, except for those
described in Section 13.2(a)(xii) (or amendments, consents and waivers with
respect to Section 10.10 to release all or substantially all of the Collateral).
No party hereto shall institute (and Borrower shall cause each other Credit
Party not to institute) against any SPV grantee of an option pursuant to this
clause (e) any bankruptcy, reorganization, insolvency, liquidation or similar
proceeding, prior to the date that is one year and one day after the payment in
full of all outstanding commercial paper of such SPV; provided, however, that
each Lender having designated an SPV as such agrees to indemnify each
Indemnified Person against any Liability that may be incurred by, or asserted
against, such Indemnified Person as a result of failing to institute such
proceeding (including a failure to get reimbursed by such SPV for any such
Liability). The agreement in the preceding sentence shall survive the
termination of the Commitments and the payment in full of the Obligations.


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          11.2 Appointment of Administrative Agent.

          GE Capital is hereby appointed to act as the Administrative Agent on
behalf of the Lenders and the Secured Parties under this Agreement and the other
Loan Documents. The provisions of this Section 11.2 are solely for the benefit
of the Administrative Agent and Lenders and no Credit Party nor any other Person
shall have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement and the
other Loan Documents, the Administrative Agent shall act solely as an agent of
the Lenders, and the Administrative Agent does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for any Credit Party or any other Person. The Administrative Agent shall
have no duties or responsibilities except for those expressly set forth in this
Agreement and the other Loan Documents. The duties of the Administrative Agent
shall be mechanical and administrative in nature, and the Administrative Agent
shall not have, or be deemed to have, by reason of this Agreement, any other
Loan Document or otherwise a fiduciary relationship in respect of any Lender.
Except as expressly set forth in this Agreement and the other Loan Documents,
the Administrative Agent shall not have any duty to disclose, and shall not be
liable for failure to disclose, any information relating to any Credit Party or
any of their respective Subsidiaries or any Account Debtor that is communicated
to or obtained by GE Capital or any of its Affiliates in any capacity. Neither
the Administrative Agent nor any of its Affiliates nor any of their respective
officers, directors, employees, agents or representatives shall be liable to any
Lender for any action taken or omitted to be taken by it hereunder or under any
other Loan Document, or in connection herewith or therewith, except for damages
caused by its or their own gross negligence or willful misconduct.

          If the Administrative Agent shall request instructions from Requisite
Lenders, Requisite Term A Lenders, Requisite Term B Lenders, Requisite Term C
Lenders, Supermajority Term A Lenders, all Lenders or all affected Lenders with
respect to any act or action (including failure to act) in connection with this
Agreement or any other Loan Document, then the Administrative Agent shall be
entitled to refrain from such act or taking such action unless and until the
Administrative Agent shall have received instructions from Requisite Lenders,
Requisite Term A Lenders, Requisite Term B Lenders, Requisite Term C Lenders,
Supermajority Term A Lenders, all Lenders or all affected Lenders, as the case
may be, and the Administrative Agent shall not incur liability to any Person by
reason of so refraining. The Administrative Agent shall be fully justified in
failing or refusing to take any action hereunder or under any other Loan
Document (a) if such action would, in the opinion of the Administrative Agent,
be contrary to law or the terms of this Agreement or any other Loan Document,
(b) if such action would, in the opinion of the Administrative Agent, expose the
Administrative Agent to Environmental Liabilities or (c) if the Administrative
Agent shall not first be indemnified to its satisfaction against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against the Administrative Agent as a
result of the Administrative Agent acting or refraining from acting hereunder or
under any other Loan Document in accordance with the instructions of Requisite
Lenders, Requisite Term A Lenders, Requisite Term B Lenders, Requisite Term C
Lenders, Supermajority Term A Lenders, all Lenders or all affected Lenders, as
applicable.


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          11.3 Administrative Agent's Reliance, Etc. None of the Administrative
Agent or any of its Affiliates or any of their respective directors, officers,
agents or employees shall be liable for any action taken or omitted to be taken
by it or them under or in connection with this Agreement or the other Loan
Documents, except for damages caused by its or their own gross negligence or
willful misconduct. Without limiting the generality of the foregoing, the
Administrative Agent: (a) may treat the payee of any Note as the holder thereof
until the Administrative Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form reasonably satisfactory to the
Administrative Agent; (b) may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (d) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of this Agreement or the other Loan Documents on the part of any
Credit Party or to inspect the Collateral (including the Books and Records to
the extent not prohibited by a confidentiality agreement in favor of a third
party) of any Credit Party; (e) shall not be responsible to any Lender for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; and (f) shall incur no liability
under or in respect of this Agreement or the other Loan Documents by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties.

          11.4 GE Capital and Affiliates.

          With respect to its Commitments hereunder, GE Capital shall have the
same rights and powers under this Agreement and the other Loan Documents as any
other Lender and may exercise the same as though it were not the Administrative
Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly
indicated, include GE Capital in its individual capacity. GE Capital and its
Affiliates may lend money to, invest in, and generally engage in any kind of
business with, any Credit Party, any of their Affiliates and any Person who may
do business with or own securities of any Credit Party or any such Affiliate,
all as if GE Capital were not the Administrative Agent and without any duty to
account therefor to Lenders. GE Capital and its Affiliates may accept fees and
other consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders. Each
Lender acknowledges the potential conflict of interest between GE Capital as a
Lender holding disproportionate interests in the Loans and GE Capital as the
Administrative Agent.

          11.5 Lender Credit Decision.

          Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on the
Financial Statements referred to in Section 3.4(a) and such other documents and
information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance


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upon the Administrative Agent or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.

          11.6 Indemnification.

          Lenders agree to indemnify the Administrative Agent (to the extent not
reimbursed by Credit Parties and without limiting the Obligations of Credit
Parties hereunder), ratably according to their respective Pro Rata Shares, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against the
Administrative Agent in any way relating to or arising out of this Agreement or
any other Loan Document or any action taken or omitted to be taken by the
Administrative Agent in connection therewith; provided, that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent's gross negligence or willful misconduct. Without
limiting the foregoing, each Lender agrees to reimburse the Administrative Agent
promptly upon demand for its ratable share of any out-of-pocket expenses
(including reasonable counsel fees) incurred by the Administrative Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and each other Loan Document, to the
extent that the Administrative Agent is not reimbursed for such expenses by
Credit Parties.

          11.7 Successor Agents.

          The Administrative Agent may resign at any time by giving not less
than thirty (30) days' prior written notice thereof to Lenders and Borrower.
Upon any such resignation, the Requisite Lenders shall have the right to appoint
a successor the Administrative Agent. If a successor Administrative Agent shall
not have been so appointed by the Requisite Lenders and shall not have accepted
such appointment within thirty (30) days after the resigning Administrative
Agent's giving notice of resignation, then such resigning Administrative Agent
on behalf of the Lenders may appoint a successor Administrative Agent, which
shall be a Lender, if such Lender is willing to accept such appointment, or
otherwise shall be a commercial bank or financial institution or a subsidiary of
a commercial bank or financial institution if such commercial bank or financial
institution is organized under the laws of the United States of America or of
any State thereof and has a combined capital and surplus of at least
$300,000,000. If a successor Administrative Agent has not been appointed
pursuant to the foregoing, within thirty (30) days after the date such notice of
resignation was given by such resigning Administrative Agent, such resignation
shall become effective and the Requisite Lenders shall thereafter perform all
the duties of the Administrative Agent hereunder until such time, if any, as the
Requisite Lenders appoint a successor Administrative Agent as provided above.
Any successor Administrative Agent appointed by Requisite Lenders hereunder
shall be subject to the approval of Borrower, such approval not to be
unreasonably withheld or delayed; provided, that


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such approval shall not be required if a Default or an Event of Default has
occurred and is continuing. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall succeed to and become vested with all the
rights, powers, privileges and duties of the resigning Administrative Agent.
Upon the earlier of (i) the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent or (ii) the effective date
of the resigning Administrative Agent's resignation, such resigning
Administrative Agent shall be discharged from its duties and obligations under
this Agreement and the other Loan Documents, except that any indemnity rights or
other rights in favor of such resigning Administrative Agent shall continue.
After any Administrative Agent's resignation hereunder, the provisions of this
Article 9 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was acting as the Administrative Agent under this Agreement
and the other Loan Documents.

          11.8 Setoff and Sharing of Payments.

          In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, each Lender is hereby
authorized upon the occurrence and during the continuance of any Event of
Default and subject to Section 11.9(d), at any time or from time to time,
without prior notice to any Credit Party or to any Person other than the
Administrative Agent (except as otherwise required by the Orders), any such
notice being hereby expressly waived, to offset and to appropriate and to apply
any and all balances held by it at any of its offices for the account of
Borrower or any Guarantor (regardless of whether such balances are then due to
Borrower or any Guarantor) and any other properties or assets at any time held
or owing by that Lender or that holder to or for the credit or for the account
of Borrower or any Guarantor against and on account of any of the Obligations
that are not paid when due; provided, that the Lender exercising such offset
rights shall give notice thereof to the affected Credit Party, except as
otherwise required by the Orders, promptly after exercising such rights. Any
Lender exercising a right of setoff or otherwise receiving any payment on
account of the Obligations in excess of its Pro Rata Share thereof shall
purchase for cash (and the other Lenders or holders shall sell) such
participations in each such other Lender's or holder's Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share the amount so
offset or otherwise received with each other Lender or holder in accordance with
their respective Pro Rata Shares, (other than offset rights exercised by any
Lender with respect to Sections 1.11, 1.13 or 1.14). Borrower and each Guarantor
agrees, to the fullest extent permitted by law, that (a) any Lender may exercise
its right to offset with respect to amounts in excess of its Pro Rata Share of
the Obligations and may sell participations in such amounts so offset to other
Lenders and holders and (b) any Lender so purchasing a participation in the
Loans made or other Obligations held by other Lenders or holders may exercise
all rights of offset, bankers' lien, counterclaim or similar rights with respect
to such participation as fully as if such Lender or holder were a direct holder
of the Loans and the other Obligations in the amount of such participation.
Notwithstanding the foregoing, if all or any portion of the offset amount or
payment otherwise received is thereafter recovered from the Lender that has
exercised the right of offset, the purchase of participations by that Lender
shall be rescinded and the purchase price restored without interest.

          11.9 Payments; Non-Funding Lenders; Information; Actions in Concert.


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          (a) Payments. Not less than once during each calendar month or more
frequently at the Administrative Agent's election (each, a "Settlement Date"),
the Administrative Agent shall advise each Lender by telephone, or telecopy of
the amount of such Lender's Pro Rata Share of principal, interest and Fees paid
for the benefit of Lenders with respect to each applicable Loan. Provided that
each Lender has funded all payments and Loans required to be made by it and
purchased all participations required to be purchased by it under this Agreement
and the other Loan Documents as of such Settlement Date, the Administrative
Agent shall pay to each Lender such Lender's Pro Rata Share of principal,
interest and Fees paid by Borrower since the previous Settlement Date for the
benefit of such Lender on the Loans held by it. To the extent that any Lender (a
"Non-Funding Lender") has failed to fund all such payments and Loans or failed
to fund the purchase of all such participations, the Administrative Agent shall
be entitled to set off the funding short-fall against that Non-Funding Lender's
Pro Rata Share of all payments received from Borrower. Such payments shall be
made by wire transfer to such Lender's account (as specified by such Lender in
Annex H or the applicable Assignment Agreement) not later than 2:00 p.m. (New
York time) on the next Business Day following each Settlement Date.

          (b) Return of Payments.

               (i) If the Administrative Agent pays an amount to a Lender under
this Agreement in the belief or expectation that a related payment has been or
will be received by the Administrative Agent from Borrower and such related
payment is not received by the Administrative Agent, then the Administrative
Agent will be entitled to recover such amount from such Lender on demand without
setoff, counterclaim or deduction of any kind.

               (ii) If the Administrative Agent determines at any time that any
amount received by the Administrative Agent under this Agreement must be
returned to Borrower or paid to any other Person pursuant to any insolvency law
or otherwise, then, notwithstanding any other term or condition of this
Agreement or any other Loan Document, the Administrative Agent will not be
required to distribute any portion thereof to any Lender. In addition, each
Lender will repay to the Administrative Agent on demand any portion of such
amount that the Administrative Agent has distributed to such Lender, together
with interest at such rate, if any, as the Administrative Agent is required to
pay to Borrower or such other Person, without setoff, counterclaim or deduction
of any kind.

          (c) Dissemination of Information. The Administrative Agent shall use
reasonable efforts to provide Lenders with any notice of Default or Event of
Default received by the Administrative Agent from, or delivered by the
Administrative Agent to, any Credit Party, with notice of any Event of Default
of which the Administrative Agent has actually become aware and with notice of
any action taken by the Administrative Agent following any Event of Default;
provided, that the Administrative Agent shall not be liable to any Lender for
any failure to do so, except to the extent that such failure is attributable to
the Administrative Agent's gross negligence or willful misconduct. Lenders
acknowledge that Borrower is required to provide Financial Statements and
Collateral Reports to Lenders in accordance with Annexes E and F hereto and
agree that the Administrative Agent shall not have the duty to provide the same
to Lenders.


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          (d) Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or the Notes (including exercising any rights of setoff) without first
obtaining the prior written consent of the Administrative Agent and Requisite
Lenders, it being the intent of Lenders that any such action to protect or
enforce rights under this Agreement and the Notes shall be taken in concert and
at the direction or with the consent of the Administrative Agent or Requisite
Lenders.

12. SUCCESSORS AND ASSIGNS

          12.1 Successors and Assigns.

          This Agreement and the other Loan Documents shall be binding on and
shall inure to the benefit of each Credit Party, the Administrative Agent,
Lenders and their respective successors and assigns (including, in the case of
any Credit Party, a debtor-in-possession on behalf of such Credit Party), except
as otherwise provided herein or therein. No Credit Party may assign, transfer,
hypothecate or otherwise convey its rights, benefits, obligations or duties
hereunder or under any of the other Loan Documents without the prior express
written consent of the Administrative Agent and Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any Credit Party
without the prior express written consent of the Administrative Agent and
Lenders shall be void. The terms and provisions of this Agreement are for the
purpose of defining the relative rights and obligations of each Credit Party,
the Administrative Agent and Lenders with respect to the transactions
contemplated hereby and no Person shall be a third party beneficiary of any of
the terms and provisions of this Agreement or any of the other Loan Documents.

13. MISCELLANEOUS

          13.1 Complete Agreement; Modification of Agreement.

          The Loan Documents constitute the complete agreement between the
parties with respect to the subject matter thereof and may not be modified,
altered or amended except as set forth in Section 13.2. Any letter of interest,
commitment letter, fee letter or confidentiality agreement, if any, between any
Credit Party and the Administrative Agent or any Lender or any of their
respective Affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect shall be superseded by this
Agreement. Notwithstanding the foregoing, the Fee Letters and all obligations of
Borrower with respect to syndication contained in the GE Capital Commitment
Letter shall survive the execution and delivery of this Agreement and shall
continue to be binding obligations of the parties.

          13.2 Amendments and Waivers.

          (a) Except as otherwise expressly provided in this Agreement, the
Requisite Lenders (or the Administrative Agent with the prior written consent of
the Requisite Lenders), on the one hand, and Borrower, on the other hand, may
from time to time enter into written amendments, supplements or modifications
for the purpose of adding, deleting or modifying any provision of any Loan
Document or changing in any manner the rights, remedies, obligations and duties
of the parties thereto, and with the written consent of the Requisite Lenders,
the


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Administrative Agent, on behalf of Lenders, may execute and deliver a written
instrument waiving, on such terms and conditions as may be specified in such
instrument, any of the requirements applicable to the Credit Parties, as the
case may be, party to any Loan Document, or any Default or Event of Default and
its consequences; provided, that:

               (i) the Requisite Term A Lenders (or the Administrative Agent
     with the prior written consent of the Requisite Term A Lenders), on the one
     hand, and Borrower, on the other hand, may amend, supplement or otherwise
     modify or waive any of the terms and provisions (and related definitions)
     (A) related solely to the borrowings (including any conditions to such
     borrowings) and payment procedures with respect to the Term Loan A and (B)
     solely affecting the relative rights, remedies, obligations and priorities
     among Term A Lenders, which does not adversely affect any Term B Lender or
     Term C Lender (in each case, except to the extent any such amendment,
     supplement, modification or waiver would result in an increase of the
     aggregate Term A Commitment or the aggregate outstanding principal amount
     of the Term Loan A);

               (ii) the Requisite Term B Lenders (or the Administrative Agent
     with the prior written consent of the Requisite Term B Lenders), on the one
     hand, and Borrower, on the other hand, may amend, supplement or otherwise
     modify or waive any of the terms and provisions (and related definitions)
     (A) related solely to the borrowings (including any conditions to such
     borrowings) and payment procedures with respect to the Term Loan B and (B)
     solely affecting the relative rights, remedies, obligations and priorities
     among Term B Lenders, which does not adversely affect any Term A Lender or
     Term C Lender (in each case, except to the extent any such amendment,
     supplement, modification or waiver would result in an increase of the
     aggregate Term B Commitment or the aggregate outstanding principal amount
     of the Term Loan B);

               (iii) the Requisite Term C Lenders (or the Administrative Agent
     with the prior written consent of the Requisite Term C Lenders), on the one
     hand, and Borrower, on the other hand, may amend, supplement or otherwise
     modify or waive any of the terms and provisions (and related definitions)
     (A) related solely to the borrowings (including any conditions to such
     borrowings) and payment procedures with respect to the Term Loan C and (B)
     solely affecting the relative rights, remedies, obligations and priorities
     among Term C Lenders, which does not adversely affect any Term A Lender or
     Term B Lender (in each case, except to the extent any such amendment,
     supplement, modification or waiver would result in an increase of the
     aggregate Term C Commitment or the aggregate outstanding principal amount
     of the Term Loan C);

               (iv) no amendment, waiver or consent shall, unless in writing and
     signed by the Administrative Agent in addition to Lenders required above to
     take such action, affect the rights or duties of the Administrative Agent
     under this Agreement or the other Loan Documents; and


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               (v) the Administrative Agent may, with the consent of Borrower,
     amend, modify or supplement any Loan Document to cure any ambiguity,
     typographical error, defect or inconsistency;

provided, further, that no amendment, supplement, modification or waiver shall
be effective to:

               (vi) without the prior written consent of each of the Requisite
     Term A Lenders, the Requisite Term B Lenders and the Requisite Term C
     Lenders, (A) amend, supplement, modify or waive any provision of paragraph
     (c) (Aggregate Cash on Hand) of Annex G, (B) unless expressly permitted by
     this Agreement, release or permit any Credit Party to sell or otherwise
     dispose of assets in an aggregate amount in excess of $75,000,000 or (C)
     increase the Commitment of any Lender or extend any scheduled final
     maturity of any Loan; or

               (vii) without the prior written consent of each of the
     Supermajority Term A Lenders, the Requisite Term B Lenders and the
     Requisite Term C Lenders, amend, supplement, modify or waive any of the
     terms and provisions (and related definitions) related to the Term A
     Borrowing Base (including advance rates and eligibility criteria) if more
     credit would be available to Borrower thereafter; provided, that Borrower's
     consent will not be required with respect to any modifications made in
     accordance with Section 1.6;

provided, further, that no such amendment, supplement, modification or waiver
shall be effective to, without the prior written consent, in addition to Lenders
required above to take such action, of each Lender directly affected thereby:

               (viii) (A) modify the Commitment of such Lender or subject such
     Lender to any additional obligation, (B) extend any scheduled final
     maturity of any Loan owing to such Lender, (C) waive or reduce, or postpone
     or cancel any scheduled date fixed for the payment of (it being understood
     that any mandatory prepayment required under Section 1.2(b) does not
     constitute any scheduled date fixed for payments), principal of or interest
     on any such Loan or any fees owing to such Lender, (D) reduce, or release
     Borrower from its obligations to repay, any other Obligation owed to such
     Lender or (E) consent to the assignment or transfer by Borrower of any of
     its rights and obligations under this Agreement;

               (ix) amend, modify or waive any provision of Section 1.2, 1.3 or
     11.8;

               (x) subordinate any of the Obligations or Liens securing the
     Obligations, except as permitted by this Agreement and the Skymiles
     Intercreditor Agreement; or

               (xi) (A) amend, modify or waive this Section 13.2 or any other
     provision specifying the Administrative Agent, Lenders or group of Lenders
     required for any amendment, modification or waiver thereof or (B) change
     the respective percentages specified in the definition of "Requisite
     Lenders,"


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     "Requisite Term A Lenders," "Requisite Term B Lenders," "Requisite Term C
     Lenders," or "Supermajority Term A Lenders"; or

provided, further, that no such amendment, supplement, modification or waiver
shall be effective to, without the prior written consent of all Lenders:

               (xii) (A) release any Guarantor from the obligations provided for
     in the Collateral Documents, except as otherwise permitted herein or in the
     other Loan Documents, or (B) release or permit any Credit Party to sell or
     otherwise dispose of all or substantially all of the Collateral provided
     for in the Collateral Documents; provided, however, that no waiver,
     amendment, supplement or modification shall be required for the
     Administrative Agent to take additional Collateral pursuant to any Loan
     Document.

          (b) Any waiver, amendment, supplement or modification pursuant to this
Section 13.2 shall apply equally to each of Lenders and shall be binding upon
Lenders and all future holders of any of the Loans, the Notes, the Letter of
Credit Obligations and all other Obligations.

          (c) To the extent (a) the consent or vote of any Lender in its
capacity as a Term A Lender, a Term B Lender or a Term C Lender, as applicable,
is required, but not obtained (any such Lender whose consent is not obtained as
described in this Section 13.2(c) being referred to as a "Non-Consenting
Lender") in connection with any proposed amendment, modification, supplement,
waiver or exercise of remedies (a "Proposed Change") and (b) the Administrative
Agent shall have consented to such Proposed Change, at the request of Borrower
and with the consent of the Administrative Agent (not to be unreasonably
withheld), any Person reasonably acceptable to such Administrative Agent (which
Person may be the Lender acting as such Administrative Agent and shall have
consented to such Proposed Change) shall have the right (but not the obligation)
to purchase from such Non-Consenting Lender, and such Non-Consenting Lender
shall, upon the request of such Administrative Agent, sell and assign to such
Person all of the applicable Commitments and Loans of such Non-Consenting Lender
for an amount equal to the principal balance of all applicable Loans held by
such Non-Consenting Lender and all accrued and unpaid interest and fees with
respect thereto through the date of such sale and purchase (the "Purchase
Amount"); provided, however, that such sale and purchase (and the corresponding
assignment) shall not be effective until (A) such Administrative Agent shall
have received from such Person an agreement in form and substance satisfactory
to such Administrative Agent whereby such Person shall agree to be bound by the
terms hereof and (B) such Non-Consenting Lender shall have received the Purchase
Amount from such Person. Each Lender agrees that, if it becomes a Non-Consenting
Lender, it shall execute and deliver to the Administrative Agent the Note or
Notes evidencing such Commitments or Loans and an Assignment Agreement to
evidence such sale and assignment; provided, however, that the failure of any
Non-Consenting Lender to deliver such Note or Notes or execute an Assignment
Agreement shall not render such sale and purchase (and the corresponding
assignment) invalid.

          (d) Upon the Termination Date, the Administrative Agent shall deliver
to Borrower termination statements, mortgage releases, reconveyances and other
documents


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necessary or appropriate to evidence the termination of the Liens securing
payment of the Obligations.

          13.3 Fees and Expenses.

          Borrower shall reimburse (i) the Administrative Agent for all fees,
costs and expenses (including the reasonable fees and expenses of all of its
counsel, advisors, consultants and auditors) and (ii) the Administrative Agent
(and, with respect to clauses (b), (c) and (d) below, all Lenders) for all fees,
costs and expenses, including the reasonable fees, costs and expenses of counsel
or other advisors (including environmental and management consultants and
appraisers) incurred in connection with the negotiation, preparation and filing
and/or recordation of the Loan Documents and incurred in connection with:

          (a) any amendment, modification or waiver of, or consent with respect
to, or termination of, any of the Loan Documents or advice in connection with
the syndication and administration of the Loans made pursuant hereto or its
rights hereunder or thereunder;

          (b) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by the Administrative Agent, any Lender, any Credit Party or
any other Person and whether as a party, witness or otherwise) in any way
relating to the Collateral, any of the Loan Documents or any other agreement to
be executed or delivered in connection herewith or therewith, including any
litigation, contest, dispute, suit, case, proceeding or action, and any appeal
or review thereof, in connection with a case commenced by or against any or all
of the Credit Parties or any other Person that may be obligated to the
Administrative Agent by virtue of the Loan Documents, including any such
litigation, contest, dispute, suit, proceeding or action arising in connection
with any work-out or restructuring of the Loans during the pendency of one or
more Events of Default; provided, that in the case of reimbursement of counsel
for Lenders other than the Administrative Agent, such reimbursement shall be
limited to one counsel for all such Lenders; provided, further, that no Person
shall be entitled to reimbursement under this clause (b) in respect of any
litigation, contest, dispute, suit, proceeding or action to the extent any of
the foregoing results from such Person's gross negligence or willful misconduct;

          (c) any attempt to enforce any remedies of the Administrative Agent or
any Lender against any or all of the Credit Parties or any other Person that may
be obligated to the Administrative Agent or any Lender by virtue of any of the
Loan Documents, including any such attempt to enforce any such remedies in the
course of any work-out or restructuring of the Loans during the pendency of one
or more Events of Default; provided, that in the case of reimbursement of
counsel for Lenders other than the Administrative Agent, such reimbursement
shall be limited to one counsel for all such Lenders;

          (d) any workout or restructuring of the Loans during the pendency of
one or more Events of Default; and

          (e) efforts to (i) monitor the Loans or any of the other Obligations,
(ii) evaluate, observe or assess any of the Credit Parties or their respective
affairs, and (iii) verify, protect, evaluate, assess, appraise, collect, sell,
liquidate or otherwise dispose of any of the Collateral, in each case pursuant
to and in accordance with the terms of the Loan Documents;


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including, as to each of clauses (a) through (e) above, all reasonable
attorneys' and other professional and service providers' fees arising from such
services and other advice, assistance or other representation, including those
in connection with any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel and others in connection with or
relating to any of the events or actions described in this Section 13.3, all of
which shall be payable, on demand, by Borrower to the Administrative Agent.
Without limiting the generality of the foregoing, such expenses, costs, charges
and fees may include: fees, costs and expenses of accountants, environmental
advisors, appraisers, investment bankers, management and other consultants and
paralegals; court costs and expenses; photocopying and duplication expenses;
court reporter fees, costs and expenses; long distance telephone charges; air
express charges; telegram or telecopy charges; secretarial overtime charges;
charges for any E-System; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal or other advisory
services.

          13.4 No Waiver.

          The Administrative Agent's or any Lender's failure, at any time or
times, to require strict performance by the Credit Parties of any provision of
this Agreement or any other Loan Document shall not waive, affect or diminish
any right of the Administrative Agent or such Lender thereafter to demand strict
compliance and performance herewith or therewith. Any suspension or waiver of an
Event of Default shall not suspend, waive or affect any other Event of Default
whether the same is prior or subsequent thereto and whether the same or of a
different type. Subject to the provisions of Section 13.2, none of the
undertakings, agreements, warranties, covenants and representations of any
Credit Party contained in this Agreement or any of the other Loan Documents and
no Default or Event of Default by any Credit Party shall be deemed to have been
suspended or waived by the Administrative Agent or any Lender, unless such
waiver or suspension is by an instrument in writing signed by an officer of or
other authorized employee of the Administrative Agent and the applicable
required Lenders and directed to Borrower specifying such suspension or waiver.

          13.5 Remedies.

          The Administrative Agent's and Lenders' rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
that the Administrative Agent or any Lender may have under any other agreement,
including the other Loan Documents, by operation of law or otherwise. Recourse
to the Collateral shall not be required.

          13.6 Severability.

          Wherever possible, each provision of this Agreement and the other Loan
Documents shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement or any other Loan
Document shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement or such other Loan Document.


                                       91



          13.7 Conflict of Terms.

          Except as otherwise provided in this Agreement or any of the other
Loan Documents by specific reference to the applicable provisions of this
Agreement, if any provision contained in this Agreement conflicts with any
provision in any of the other Loan Documents, the provision contained in this
Agreement shall govern and control.

          13.8 Confidentiality.

          The Administrative Agent and Lender agree to use commercially
reasonable efforts (equivalent to the efforts the Administrative Agent or Lender
applies to maintain the confidentiality of its own confidential information) to
maintain as confidential all confidential information provided to them by the
Credit Parties and designated as confidential for a period of two (2) years
following receipt thereof, except that the Administrative Agent and Lender may
disclose such information (a) to Persons employed or engaged by the
Administrative Agent or Lender; (b) to any bona fide assignee or participant or
potential assignee or participant that has agreed to comply with the covenant
contained in this Section 13.8 (and any such bona fide assignee or participant
or potential assignee or participant may disclose such information to Persons
employed or engaged by them as described in clause (a) above); (c) as required
or requested by any Governmental Authority or reasonably believed by the
Administrative Agent or Lender to be compelled by any court decree, subpoena or
legal or administrative order or process; (d) as, on the advice of the
Administrative Agent's or Lender's counsel, is required by law; (e) in
connection with the exercise of any right or remedy under the Loan Documents or
in connection with any Litigation to which the Administrative Agent or Lender is
a party related to the Loan Documents or the Loans or other Obligations
thereunder; (f) that ceases to be confidential through no fault of the
Administrative Agent or Lender; (g) to its affiliates and its and their
directors, officers, employees, advisors, representatives or agents, and (h) to
ratings agencies.

          13.9 GOVERNING LAW.

          EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS,
IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY HEREBY CONSENTS AND
AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW
YORK, NEW YORK SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, THE ADMINISTRATIVE AGENT AND
LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO
ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS; PROVIDED, THAT THE ADMINISTRATIVE AGENT, LENDERS AND THE CREDIT
PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE


                                       92



COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY AND;
PROVIDED, FURTHER THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
PRECLUDE THE ADMINISTRATIVE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF THE ADMINISTRATIVE AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND EACH CREDIT PARTY HEREBY WAIVES, TO THE EXTENT PERMITTED BY LAW,
ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS, TO THE
EXTENT PERMITTED BY LAW, TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES, TO THE EXTENT
PERMITTED BY LAW, PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN ANNEX I OF THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL, TO THE EXTENT PERMITTED BY LAW, BE
DEEMED COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF
OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE
PREPAID.

          13.10 Notices.

          (a) Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other parties, or whenever any of the parties desires to give or serve upon any
other parties any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be deemed to have been validly served, given or
delivered (a) upon the earlier of actual receipt and three (3) Business Days
after deposit in the United States Mail, registered or certified mail, return
receipt requested, with proper postage prepaid, (b) upon transmission, when sent
by telecopy or other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal delivery or
United States Mail as otherwise provided in this Section 13.10); (c) one (1)
Business Day after deposit with a reputable overnight courier with all charges
prepaid or (d) when delivered, if hand-delivered by messenger, all of which
shall be addressed to the party to be notified and sent to the address or
facsimile number indicated in Annex I or to such other address (or facsimile
number) as may be substituted by notice given as herein provided. The giving of
any notice required hereunder may be waived in writing by the party entitled to
receive such notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other communication to any
Person (other than Borrower or the Administrative Agent) designated in Annex I
to receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.


                                       93



          (b) Subject to the provisions of Section 13.10(a), each of the
Administrative Agent, Borrower, the Lenders, the L/C Issuers and each of their
Related Persons is authorized (but not required) to transmit, post or otherwise
make or communicate, in its sole discretion, Electronic Transmissions in
connection with any Loan Document and the transactions contemplated therein;
provided, that notices to any Credit Party shall not be made by any posting to
an Internet or extranet based site or other equivalent service but may be made
by e-mail or E-fax, if available, so long as such notices are also sent in
accordance with Section 13.10(a). Each Credit Party and each Secured Party
hereby acknowledges and agrees that the use of Electronic Transmissions is not
necessarily secure and that there are risks associated with such use, including
risks of interception, disclosure and abuse and each indicates it assumes and
accepts such risks by hereby authorizing the transmission of Electronic
Transmissions.

          (c) Subject to the provisions of Section 13.10(a), (i)(A) no posting
to any E-System shall be denied legal effect merely because it is made
electronically, (B) each E Signature on any such posting shall be deemed
sufficient to satisfy any requirement for a "signature" and (C) each such
posting shall be deemed sufficient to satisfy any requirement for a "writing",
in each case including pursuant to any Loan Document, any applicable provision
of any Uniform Commercial Code, the federal Uniform Electronic Transactions Act,
the Electronic Signatures in Global and National Commerce Act and any
substantive or procedural Requirement of Law governing such subject matter, (ii)
each such posting that is not readily capable of bearing either a signature or a
reproduction of a signature may be signed, and shall be deemed signed, by
attaching to, or logically associating with such posting, an E-Signature, upon
which each Secured Party and Credit Party may rely and assume the authenticity
thereof, (iii) each such posting containing a signature, a reproduction of a
signature or an E-Signature shall, for all intents and purposes, have the same
effect and weight as a signed paper original and (iv) each party hereto or
beneficiary hereto agrees not to contest the validity or enforceability of any
posting on any E-System or E-Signature on any such posting under the provisions
of any applicable Requirement of Law requiring certain documents to be in
writing or signed; provided, however, that nothing herein shall limit such
party's or beneficiary's right to contest whether any posting to any E-System or
E-Signature has been altered after transmission.

          (d) All uses of an E-System shall be governed by and subject to, in
addition to this Section 13.10, separate terms and conditions posted or
referenced in such E-System and related contractual obligations executed by
Secured Parties and Delta Companies in connection with the use of such E-System.

          (e) ALL E-SYSTEMS AND ELECTRONIC TRANSMISSIONS SHALL BE PROVIDED "AS
IS" AND "AS AVAILABLE". NONE OF THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED
PERSONS WARRANTS THE ACCURACY, ADEQUACY OR COMPLETENESS OF ANY E-SYSTEMS OR
ELECTRONIC TRANSMISSION AND DISCLAIMS ALL LIABILITY FOR ERRORS OR OMISSIONS
THEREIN. NO WARRANTY OF ANY KIND IS MADE BY THE ADMINISTRATIVE AGENT OR ANY OF
ITS RELATED PERSONS IN CONNECTION WITH ANY E SYSTEMS OR ELECTRONIC
COMMUNICATION, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM
VIRUSES OR OTHER CODE DEFECTS. The Credit Parties agree (and Borrower shall
cause each other Credit Party to


                                       94



agree) that the Administrative Agent has no responsibility for maintaining or
providing any equipment, software, services or any testing required in
connection with any Electronic Transmission or otherwise required for any
E-System.

          13.11 Section Titles.

          The Section titles and Table of Contents contained in this Agreement
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.

          13.12 Counterparts.

          This Agreement may be executed in any number of separate counterparts,
each of which shall collectively and separately constitute one agreement.

          13.13 WAIVER OF JURY TRIAL.

          BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, AMONG THE ADMINISTRATIVE AGENT, LENDERS AND ANY CREDIT PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.

          13.14 Press Releases and Related Matters.

          Each Credit Party executing this Agreement agrees that neither it nor
its Affiliates will in the future issue any press releases or other public
disclosure using the name of the Administrative Agent or any Arranger or its
affiliates or referring to this Agreement, the other Loan Documents without at
least two (2) Business Days' prior notice to the Administrative Agent or such
Arranger, as the case may be, and without the prior written consent of the
Administrative Agent or such Arranger, as the case may be, unless (and only to
the extent that) such Credit Party or Affiliate is required to do so under law
and then, in any event, such Credit Party or Affiliate will consult, to the
extent permitted by law, with the Administrative Agent or such Arranger, as the
case may be, before issuing such press release or other public disclosure. Each
Credit Party consents to the publication by the Administrative Agent, any
Arranger or Lender of advertising material relating to the financing
transactions contemplated by this Agreement using Borrower's name, product
photographs, logo or trademark. The Administrative Agent, any Arranger or any
Lender shall provide a draft of any advertising


                                       95



material to each Credit Party for review and comment at least two (2) Business
Days prior to the publication thereof. Each of the Administrative Agent and the
Arrangers reserves the right to provide to industry trade organizations
information necessary and customary for inclusion in league table measurements.

          13.15 [Reserved].

          13.16 Advice of Counsel.

          Each of the parties represents to each other party hereto that it has
discussed this Agreement and, specifically, the provisions of Sections 13.9 and
13.13, with its counsel.

          13.17 No Strict Construction.

          The parties hereto have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provisions of this
Agreement.

            [The remainder of this page is intentionally left blank.]


                                       96



     IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first written above.

                                        DELTA AIR LINES, INC., as Borrower


                                        By: /s/ Paul A. Jacobson
                                            ------------------------------------
                                        Name: Paul A. Jacobson
                                        Title: Vice President and Treasurer

                                              Signature Page to Credit Agreement



                                        GENERAL ELECTRIC CAPITAL
                                        CORPORATION, as Administrative Agent
                                        and Lender


                                        By: /s/ Douglas A. Kelly
                                            ------------------------------------
                                        Name: Douglas A. Kelly
                                        Title: Duly Authorized Signatory


                                        MORGAN STANLEY SENIOR FUNDING, INC.,
                                        as Lender


                                        By: /s/ Jason Colodne
                                            ------------------------------------
                                        Name: Jason Colodne
                                        Title: Executive Director

                                              Signature Page to Credit Agreement



The following Persons are signatories to this Agreement in their capacity as
Credit Parties and not as Borrower.

                                        ASA HOLDINGS, INC.


                                        By: /s/ Kenneth W. Morge
                                            ------------------------------------
                                        Name: Kenneth W. Morge
                                        Title: Vice President


                                        COMAIR HOLDINGS, LLC


                                        By: /s/ Donald T. Bornhorst
                                            ------------------------------------
                                        Name: Donald T. Bornhorst
                                        Title: Treasurer


                                        COMAIR, INC.


                                        By: /s/ Donald T. Bornhorst
                                            ------------------------------------
                                        Name: Donald T. Bornhorst
                                        Title: Chief Financial Officer


                                        COMAIR SERVICES, INC.


                                        By: /s/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Treasurer


                                        CROWN ROOMS, INC.


                                        By: /s/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Assistant Treasurer

                                              Signature Page to Credit Agreement



                                        DAL AIRCRAFT TRADING, INC.


                                        By: /s/ Kenneth W. Morge
                                            ------------------------------------
                                        Name: Kenneth W. Morge
                                        Title: Treasurer


                                        DAL GLOBAL SERVICES, LLC


                                        By: /s/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Assistant Treasurer


                                        DAL MOSCOW, INC.


                                        By: /s/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Assistant Treasurer


                                        DELTA AIRELITE BUSINESS JETS, INC.


                                        By: /a/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Assistant Treasurer


                                        DELTA BENEFITS MANAGEMENT, INC.


                                        By: /s/ Michael O. Randolfi
                                            ------------------------------------
                                        Name: Michael O. Randolfi
                                        Title: Treasurer

                                              Signature Page to Credit Agreement



                                        DELTA CONNECTION ACADEMY, INC.


                                        By: /s/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Treasurer


                                        DELTA CORPORATE IDENTITY, INC.


                                        By: /s/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Assistant Treasurer


                                        DELTA LOYALTY MANAGEMENT SERVICES, LLC


                                        By: /s/ Michael O. Randolfi
                                            ------------------------------------
                                        Name: Michael O. Randolfi
                                        Title: Treasurer


                                        DELTA TECHNOLOGY, LLC


                                        By: /s/ E. Alan Arnold
                                            ------------------------------------
                                        Name: E. Alan Arnold
                                        Title: Secretary


                                        DELTA VENTURES III, LLC


                                        By: /s/ Michael O. Randolfi
                                            ------------------------------------
                                        Name: Michael O. Randolfi
                                        Title: Treasurer

                                              Signature Page to Credit Agreement



                                        EPSILON TRADING, INC.


                                        By: /s/ Michael O. Randolfi
                                            ------------------------------------
                                        Name: Michael O. Randolfi
                                        Title: Assistant Treasurer


                                        KAPPA CAPITAL MANAGEMENT, INC.


                                        By: /s/ Michael O. Randolfi
                                            ------------------------------------
                                        Name: Michael O. Randolfi
                                        Title: President


                                        SONG, LLC


                                        By: /s/ Kenneth W. Morge
                                            ------------------------------------
                                        Name: Kenneth W. Morge
                                        Title: Assistant Treasurer

                                              Signature Page to Credit Agreement



                               ANNEX A (RECITALS)
                                       TO
                                CREDIT AGREEMENT

                                   DEFINITIONS

          Capitalized terms used in the Loan Documents shall have (unless
otherwise provided elsewhere in the Loan Documents) the following respective
meanings and all references to Sections, Exhibits, Schedules or Annexes in the
following definitions shall refer to Sections, Exhibits, Schedules or Annexes of
or to the Agreement:

          "Account Debtor" means any Person who may become obligated to any
Credit Party under, with respect to, or on account of, an Account, Chattel Paper
or General Intangibles (including a payment intangible).

          "Accounting Changes" has the meaning ascribed thereto in Annex G.

          "Accounts" means all "accounts," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, including (a) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper or Instruments), (including
any such obligations that may be characterized as an account or contract right
under the Code), (b) all of each Credit Party's rights in, to and under all
purchase orders or receipts for goods or services, (c) all of each Credit
Party's rights to any goods represented by any of the foregoing (including
unpaid sellers' rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods), (d) all
healthcare insurance receivables, and (e) all collateral security of any kind,
now or hereafter in existence, given by any Account Debtor or other Person with
respect to any of the foregoing.

          "Additional Aircraft" shall have the meaning ascribed to it in the
Aircraft Mortgage.

          "Additional Engine" shall have the meaning ascribed to it in the
Aircraft Mortgage.

          "Administrative Agent" has the meaning ascribed to it in the Preamble.

          "Affected Lender" has the meaning ascribed to it in Section 1.14(e).

          "Affiliate" means, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, 20% or more of the Stock having ordinary voting
power in the election of directors of such Person, (b) each Person that
controls, is controlled by or is under common control with such Person, and (c)
each of such Person's joint venturers and partners who are Affiliates under
clause (a) hereof. For the purposes of this definition, "control" of a Person
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of its management or policies,


                                       A-1



whether through the ownership of voting securities, by contract or otherwise;
provided, that the term "Affiliate," when used with reference to a Credit Party,
shall specifically exclude the Administrative Agent and each Lender.

          "Aggregate Cash On Hand" means the amount of cash and Cash Equivalents
of the Delta Companies that may be classified, in accordance with GAAP, as
"unrestricted" on the consolidated balance sheets of Borrower.

          "Agreement" means this Agreement, as the same may be amended,
supplemented, restated or otherwise modified from time to time.

          "Air Carrier" means each of Borrower and Comair, Inc.

          "Aircraft" shall have the meaning ascribed to it in the Aircraft
Mortgage.

          "Aircraft Mortgage" means the Aircraft Mortgage and Security Agreement
in the form of Exhibit B hereto entered into by and among the Administrative
Agent for the benefit of the Secured Parties and each Credit Party that is a
signatory thereto, as amended, modified or supplemented from time to time.

          "Airport Authority" shall have the meaning ascribed to it in the SGR
Security Agreement.

          "Allocated Amount" means, with respect to any asset, the amount
allocated to such asset in the most recent Borrowing Base Certificate delivered
by Borrower to the Administrative Agent in accordance with Annex F.

          "Amex" means American Express Travel Related Services Company, Inc.
and each of its affiliates party to the Existing Skymiles Facility Documents or
the Post-Petition Skymiles Facility Documents, as applicable.

          "Appendices" has the meaning ascribed to it in the recitals to the
Agreement.

          "Applicable Term A Index Margin" means the per annum interest rate
from time to time in effect and payable in addition to the Index Rate applicable
to the Term Loan A, as determined by reference to Section 1.5(a).

          "Applicable Term A LIBOR Margin" means the per annum interest rate
from time to time in effect and payable in addition to the LIBOR Rate applicable
to the Term Loan A, as determined by reference to Section 1.5(a).

          "Applicable Term B Index Margin" means the per annum interest rate
from time to time in effect and payable in addition to the Index Rate applicable
to the Term Loan B, as determined by reference to Section 1.5(a).

          "Applicable Term B LIBOR Margin" means the per annum interest rate
from time to time in effect and payable in addition to the LIBOR Rate applicable
to the Term Loan B, as determined by reference to Section 1.5(a).


                                      A-2



          "Applicable Term C Index Margin" means the per annum interest rate
from time to time in effect and payable in addition to the Index Rate applicable
to the Term Loan C, as determined by reference to Section 1.5(a).

          "Applicable Term C LIBOR Margin" means the per annum interest rate
from time to time in effect and payable in addition to the LIBOR Rate applicable
to the Term Loan C, as determined by reference to Section 1.5(a).

          "Appraisers" shall mean Simat, Helliesen & Eichner, Inc., Sage
Popovich and Cushman & Wakefield (with respect to the Owned Real Estate
appraised on or before the Closing Date), or such other appraisers acceptable to
the Administrative Agent.

          "Approved Fund" means, with respect to any Lender, any Person (other
than a natural Person) that (a) is or will be engaged in making, purchasing,
holding or otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of its business and (b) is advised or managed by
(i) such Lender, (ii) any Affiliate of such Lender or (iii) any Person (other
than an individual) or any Affiliate of any Person (other than an individual)
that administers or manages such Lender.

          "ARB Indebtedness" means, with respect to any Delta Company, without
duplication, all Indebtedness or obligations of such Delta Company created or
arising with respect to any limited recourse revenue bonds issued for the
purpose of financing or refinancing improvements to, or the construction or
acquisition of, airport and other related facilities and equipment, the use or
construction of which qualifies and renders such bonds exempt from certain
federal or state taxes.

          "Arrangement Fee Letter" means the Fee Letter, dated September 10,
2005, between GE Capital and Borrower.

          "Arrangers" shall mean, collectively, (a) with respect to Term Loan A
and Term Loan B, GE Capital Markets, Inc. and (b) with respect to Term Loan C,
GE Capital Markets, Inc. and Morgan Stanley Senior Funding, Inc.

          "Asset Sale" has the meaning ascribed to it in Section 6.8.

          "Assignment Agreement" has the meaning ascribed to it in Section
11.1(a).

          "Aviation Authority" means any nation or government or national or
governmental authority of any nation, state, province or other political
subdivision thereof, and any agency, department, regulator, airport authority,
air navigation authority or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
in respect of the regulation of commercial aviation or the registration,
airworthiness or operation of civil aircraft and having jurisdiction over the
Credit Parties including, without limitation, the FAA or DOT.

          "Avoidance Actions" shall mean the Credit Parties' claims and causes
of action arising under Section 502(d), 544, 547, 548 or 550 of the Bankruptcy
Code or any other


                                      A-3



avoidance action under the Bankruptcy Code; provided, that "Avoidance Actions"
shall not include any Proceeds of such property.

          "Bankruptcy Code" means the provisions of Title 11 of the United
States Code, 11 U.S.C. Sections 101 et seq.

          "Bankruptcy Court" has the meaning ascribed to it in the Preamble or
shall mean any other court having competent jurisdiction over the Cases.

          "Blocked Account" means any account of any Credit Party that is
subject to a Blocked Account Agreement or a Control Letter pursuant to Annex C.

          "Blocked Account Agreement" means a control agreement, in form and
substance satisfactory to the Administrative Agent, among any Credit Party, the
Administrative Agent for the benefit of Secured Parties and the applicable bank
or financial institution. Any Blocked Account Agreement substantially in the
form of any Blocked Account Agreement in effect on the Closing Date shall be
deemed to be satisfactory to the Administrative Agent.

          "Books and Records" means books and records of the Credit Parties,
including financial, corporate, operations and sales books, records, books of
account, sales and purchase records, lists of suppliers and customers, formulae,
business reports, plans and projections and all other documents, logs, surveys,
plans, files, records, assessments, correspondence, and other data and
information, financial or otherwise, and all aircraft manuals, log books and
other documents and records, including all data and information stored on
computer-related or other electronic media.

          "Borrower" has the meaning ascribed thereto in the preamble to the
Agreement.

          "Borrowing Base Certificate" means a certificate to be executed and
delivered from time to time by Borrower in the form attached to the Agreement as
Exhibit 4.1(b).

          "Business Day" means any day that is not a Saturday, a Sunday or a day
on which banks are required or permitted to be closed in the State of New York
and in reference to LIBOR Loans shall mean any such day that is also a LIBOR
Business Day.

          "Capital Expenditures" means, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period, net of cash amounts received by
Borrower and its Subsidiaries from other Persons during such period in
reimbursement of Capital Expenditures made by Borrower and its Subsidiaries and
excluding interest capitalized during construction, for any fixed assets or
improvements or for replacements, substitutions or additions thereto, that have
a useful life of more than one year and that are required to be capitalized
under GAAP (including equipment which in the ordinary course of business is
purchased simultaneously with the trade-in or exchange of existing equipment
owned by Borrower or any of its Subsidiaries to the extent of the gross amount
of such purchase price less the book value of the equipment being traded in or
exchanged at such time), but excluding expenditures made in connection with the
replacement or restoration of assets to the extent reimbursed or financed from
(x) insurance proceeds paid on account of the


                                       A-4



loss of or the damage to the assets being replaced or restored, or (y) awards of
compensation arising from the taking by condemnation or eminent domain of such
assets being replaced.

          "Capital Lease" means, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.

          "Capital Lease Obligation" means, with respect to any Capital Lease of
any Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.

          "Carve-Out" means claims of the following parties for the following
amounts: (i) the unpaid fees of the U.S. Trustee or the Clerk of the Bankruptcy
Court pursuant to 28 U.S.C. Section 1930(a) and (ii) after the occurrence and
during the continuance of an Event of Default, the aggregate allowed unpaid fees
and expenses payable under sections 330 and 331 of the Bankruptcy Code to
professional persons retained pursuant to an order of the Bankruptcy Court by
any Credit Party or any Committee not to exceed $35,000,000 (plus all unpaid
professional fees and disbursements accrued or incurred prior to the occurrence
of an Event of Default and reflected on the most recent Borrowing Base
Certificate and reserved against the Term A Borrowing Base, or otherwise
reported in writing to the Administrative Agent, to the extent allowed by the
Bankruptcy Court at any time) in the aggregate; provided, that the Carve-Out
shall not include, apply to or be available for any fees or expenses incurred by
any party, including any Credit Party or any Committee, in connection with the
initiation or prosecution of any claims, causes of action, adversary proceedings
or other litigation against the Administrative Agent, the Lenders or the L/C
Issuers, including challenging the amount, validity, perfection, priority or
enforceability of or asserting any defense, counterclaim or offset to, the
Obligations or the security interests and Liens of the Secured Parties in
respect thereof; provided, further, that (a) as long as no Event of Default
shall have occurred and be continuing, the Credit Parties shall be permitted to
pay compensation and reimbursement of expenses allowed and payable under
sections 330 and 331 of the Bankruptcy Code, as the same may be due and payable,
and the same shall not reduce the Carve-Out and (b) in the event the Carve-Out
is reduced by any amount during an Event of Default, upon the effectiveness of
any cure or waiver of such Event of Default pursuant to the terms of this
Agreement, the Carve-Out shall be increased by such amount.

          "Cases" has the meaning ascribed to it in the Preamble.

          "Cash Collateral Account" means a cash collateral account in the name
of Borrower and subject to a Blocked Account Agreement, into which the Net Cash
Proceeds of the Collateral, including the Term A Borrowing Base and, at the
election of Borrower, cash or Cash Equivalents are deposited pursuant to the
Agreement, the Collateral Documents and any other Loan Document.

          "Cash Equivalents" means Permitted Investments and such other cash and
cash equivalents acceptable to the Administrative Agent.


                                      A-5



          "Cash Management Systems" has the meaning ascribed to it in Section
1.7.

          "CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 (42 U.S.C. Sections 9601 et seq.).

          "Certificated Air Carrier" shall mean an "air carrier" within the
meaning of Section 40102 of Title 49, holding a certificate of public
convenience and necessity under Section 41102 of Title 49 and an air carrier
operating certificate under 14 C.F.R. Part 121 of the Federal Aviation
Regulations authorizing its operations to/from/within the United States.

          "Change of Control" means any of the following: (a) any person or
group of persons (within the meaning of the Securities Exchange Act of 1934)
shall have acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 40% or more of the issued and outstanding shares of
capital Stock of Borrower having the right to vote for the election of directors
of Borrower under ordinary circumstances other than any employee benefit plan of
Borrower or any of its Subsidiaries or any Person organized, appointed or
established by borrower or any of its Subsidiaries for, or pursuant to, the
terms of any such employee benefit plan; or (b) during any period of twelve
consecutive calendar months, individuals who at the beginning of such period
constituted the board of directors of Borrower (together with any new directors
whose election by the board of directors of Borrower or whose nomination for
election by the Stockholders of Borrower was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason other than death or disability to
constitute a majority of the directors then in office.

          "Charges" means all federal, state, county, city, municipal, local,
foreign or other governmental taxes (including taxes owed to the PBGC at the
time due and payable), levies, assessments, charges, liens, claims or
encumbrances (including interest and penalties relating thereto) upon or
relating to (a) the Collateral, (b) the Obligations, (c) the employees, payroll,
income or gross receipts of any Credit Party, (d) any Credit Party's ownership
or use of any properties or other assets, or (e) any other aspect of any Credit
Party's business.

          "Chattel Paper" means any "chattel paper," as such term is defined in
the Code, including electronic chattel paper, now owned or hereafter acquired by
any Credit Party, wherever located.

          "Citibank Cash Collateral Account" means the Cash Collateral Account
as defined in the Security Agreement dated as of September 1, 2004 between
Borrower and Citibank, N.A. and the cash, cash equivalents and other investment
property and financial assets credited thereto, and all proceeds thereof, in an
amount not to exceed $20,000,000.

          "Claim" has the meaning ascribed to such term in Section 101(5) of the
Bankruptcy Code.

          "Closing Date" has the meaning ascribed to it in Section 2.1.


                                       A-6



          "Closing Checklist" means the schedule, including all appendices,
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Agreement, the other Loan Documents and the
transactions contemplated thereunder, substantially in the form attached hereto
as Annex D.

          "Code" means the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of New York; provided, that to the
extent that the Code is used to define any term herein or in any Loan Document
and such term is defined differently in different Articles or Divisions of the
Code, the definition of such term contained in Article or Division 9 shall
govern; provided, further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, Administrative Agent's or Lender's Lien on any
Collateral is governed by the Uniform Commercial Code as enacted and in effect
in a jurisdiction other than the State of New York, the term "Code" shall mean
the Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions.

          "Collateral" means all property and interests in property and proceeds
thereof now owned or hereafter acquired by any Credit Party in or upon which a
Lien is granted under this Agreement or any Collateral Documents.

          "Collateral Documents" means this Agreement, the Mortgage, the
Aircraft Mortgage, the SGR Security Agreement, the Spare Parts Mortgage and all
similar agreements entered into guaranteeing payment of, or granting a Lien upon
property as security for payment of, the Obligations.

          "Collateral Reports" means the reports with respect to the Collateral
referred to in Annex F.

          "Collection Account" means that certain account of the Administrative
Agent, account number 502-328-54 in the name of the Administrative Agent at
DeutscheBank Trust Company Americas in New York, New York ABA No. 021 001 033,
Account Name: GECC/CAF Depository, Reference: CFN5803/Term Loan, or such other
account as may be specified in writing by the Administrative Agent as the
"Collection Account."

          "Commitments" means (a) as to any Lender, the aggregate of such
Lender's Term A Commitment, Term B Commitment and Term C Commitment as set forth
on Annex J to the Agreement or in the most recent Assignment Agreement executed
by such Lender and (b) as to all Lenders, the aggregate of all Lenders' Term A
Commitments, Term B Commitments and Term C Commitments, as to each of clauses
(a) and (b), as such Commitments may be reduced, amortized or adjusted from time
to time in accordance with the Agreement.

          "Committee" means the official statutory committee of unsecured
creditors approved in the Cases pursuant to section 1102 of the Bankruptcy Code.

          "Compliance Certificate" has the meaning ascribed to it in Section (b)
of Annex E.


                                      A-7



          "Concentration Account" has the meaning ascribed to it in Section (c)
of Annex C.

          "Contracts" means all "contracts," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.

          "Control Letter" means a letter agreement, in form and substance
satisfactory to the Administrative Agent, between Administrative Agent and (i)
the issuer of uncertificated securities with respect to uncertificated
securities in the name of any Credit Party, (ii) a securities intermediary with
respect to securities, whether certificated or uncertificated, securities
entitlements and other financial assets held in a securities account in the name
of any Credit Party, (iii) a futures commission merchant or clearinghouse, as
applicable, with respect to commodity accounts and commodity contracts held by
any Credit Party, whereby, among other things, the issuer, securities
intermediary or futures commission merchant limits any security interest in the
applicable financial assets in a manner reasonably satisfactory to the
Administrative Agent, acknowledges the Lien of Administrative Agent for the
benefit of Secured Parties on such financial assets, and agrees to follow the
instructions or entitlement orders of the Administrative Agent without further
consent by the affected Credit Party. Any Control Letter substantially in the
form of any Control Letter in effect on the Closing Date shall be deemed to be
satisfactory to the Administrative Agent.

          "Copyright License" means any and all rights now owned or hereafter
acquired by any Credit Party under any written agreement granting any right to
use any Copyright or Copyright registration.

          "Copyright Security Agreements" means the Copyright Security
Agreements made in favor of Administrative Agent for the benefit of the Secured
Parties, by each applicable Credit Party substantially in the form of Exhibit C
hereto.

          "Copyrights" means all of the following now owned or hereafter adopted
or acquired by any Credit Party: (a) all copyrights and General Intangibles of
like nature (whether registered or unregistered), all registrations and
recordings thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof.

          "Credit Card" means any agreement or plan relating to a credit card,
debit card, charge card or other similar system, including but not limited to
the American Express Card, Diners Club, MasterCard, Visa Card, Carte Blanche and
Discover Card.

          "Credit Card Receivables" means any right to payment in Dollars
(including, but not limited to, rights to payment for goods, services,
insurance, fees, taxes, prepayment penalties


                                      A-8



and finance charges) from (i) any issuer of a Credit Card arising from goods or
services provided or to be provided by a Credit Party or (ii) to the extent that
the right to such payment described in clause (i) has been transferred in whole
or part to U.S. Bank, National Association ("USB") or any other settlement
and/or processing system, or, alternatively, to the extent USB or any other
settlement and/or processing system has received any collections with respect to
such right of payment, any right to payment from USB or any other settlement
and/or processing system arising from the transfer to or by USB or any other
settlement and/or processing system of such claims against an issuer of a Credit
Card.

          "Credit Parties" means Borrower and each of the Guarantors.

          "Default" means any event that, with the passage of time or notice or
both, would, unless cured or waived, become an Event of Default.

          "Default Rate" has the meaning ascribed to it in Section 1.5(d).

          "Delta Company" means Borrower and each of its Subsidiaries.

          "Deposit Accounts" means all "deposit accounts" as such term is
defined in the Code, now or hereafter held in the name of any Credit Party.

          "Designated Spare Parts Locations" means the locations set out in
Disclosure Schedule 3.26 and such other locations as are permitted by the Spare
Parts Mortgage.

          "Desk-top Aircraft Appraisal Methodology" means, in determining an
opinion as to the Net Orderly Liquidation Value of Eligible Aircraft or Eligible
Engines, including but not limited to, taking at least the following actions:
(i) reviewing the most recent Collateral Report; (ii) reviewing the Appraiser's
internal value database for values applicable to such Aircraft or Engines; and
(iii) checking other sources, such as manufacturers, other airlines and U.S.
government procurement data, for orderly liquidation prices of such Aircraft or
Engines.

          "Desk-top Ground Service Equipment Appraisal Methodology" means, in
determining an opinion as to the Net Orderly Liquidation Value of Eligible
Ground Service Equipment, including but not limited to, taking at least the
following actions: (i) reviewing the most recent Collateral Report; (ii)
reviewing the Appraiser's internal value database for values applicable to such
Ground Service Equipment; and (iii) checking other sources, such as
manufacturers, other airlines and U.S. government procurement data, for orderly
liquidation prices of such Ground Service Equipment.

          "Desk-top Spare Parts Appraisal Methodology" means, in determining an
opinion as to the Net Orderly Liquidation Value of Eligible Spare Parts,
including but not limited to, taking at least the following actions: (i)
reviewing the most recent Collateral Report; (ii) reviewing the Appraiser's
internal value database for values applicable to Spare Parts; (iii) developing a
representative sampling of a reasonable number of the different Spare Parts for
which a market check will be conducted; (iv) checking other sources, such as
manufacturers, other airlines, U.S. government procurement data and airline
parts pooling price lists, for orderly liquidation prices of the sample parts
referred to in clause (iii); (v) conducting a limited review of the inventory
reporting system applicable to the Spare Parts, including checking information


                                      A-9



reported in such system against information determined through physical
inspection; and (vi) reviewing a sampling of the Spare Parts' serviceability
tags, books and records (including tear-down reports).

          "Desk-top Tooling Appraisal Methodology" means, in determining an
opinion as to the Net Orderly Liquidation Value of Eligible Tooling, including
but not limited to, taking at least the following actions: (i) reviewing the
most recent Collateral Report; (ii) reviewing the Appraiser's internal value
database for values applicable to such Tooling; and (iii) checking other
sources, such as manufacturers, other airlines and U.S. government procurement
data, for orderly liquidation prices of such Tooling.

          "DFW Assets" means assets located at the Dallas/Fort Worth hub
facilities which are disposed of in connection with the closing of such hub
facilities as disclosed in Borrower's public disclosures on or prior to the
Closing Date.

          "DIP Fee Letter" means the Fee Letter, dated September 14, 2005, among
GE Capital, Morgan Stanley Senior Funding, Inc. and Borrower.

          "DLMS" means Delta Loyalty Management Services, Inc.

          "Documents" means any "documents," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located.

          "Dollars" or "$" means lawful currency of the United States of
America.

          "Domestic Subsidiary" means a Subsidiary of Borrower organized under
the laws of any jurisdiction within the United States of America.

          "DOT" shall mean the United States Department of Transportation or any
analogous successor agency.

          "E-Fax" means any system used to receive or transmit faxes
electronically.

          "E-Signature" means the process of attaching to or logically
associating with an Electronic Transmission an electronic symbol, encryption,
digital signature or process (including the name or an abbreviation of the name
of the party transmitting the Electronic Transmission) with the intent to sign,
authenticate or accept such Electronic Transmission.

          "E-System" means any electronic system, including Intralinks(R) and
any other Internet or extranet-based site, whether such electronic system is
owned, operated or hosted by the Administrative Agent, any of its Related
Persons or any other Person, providing for access to data protected by passcodes
or other security system.

          "EBITDAR" means, with respect to any Person for any fiscal period,
without duplication, an amount equal to (a) consolidated net income of such
Person for such period, determined in accordance with GAAP, minus (b) the sum of
(i) income tax credits, (ii) interest income, (iii) gain from extraordinary
items for such period, (iv) any aggregate net gain during such period arising
from the sale, exchange or other disposition of capital assets by such Person


                                      A-10



(including any fixed assets, whether tangible or intangible, all inventory sold
in conjunction with the disposition of fixed assets and all securities) (a
"Capital Asset Sale"), and (v) any other non-cash gains that have been added in
determining consolidated net income, in each case to the extent included in the
calculation of consolidated net income of such Person for such period in
accordance with GAAP, but without duplication, plus (c) the sum of (i) any
provision for income taxes, (ii) Interest Expense, (iii) loss from extraordinary
items for such period, (iv) depreciation and amortization for such period, (v)
amortized debt discount for such period, (vi) the amount of any deduction to
consolidated net income as the result of any grant to any employee of such
Person of any Stock, (vii) depreciation, amortization and aircraft rent expense
for such period, in each case to the extent included in the calculation of
consolidated net income of such Person for such period in accordance with GAAP,
(viii) any aggregate net loss during such period arising from a Capital Asset
Sale, (ix) all other non-cash charges for such period, (x) costs and expenses,
including fees, incurred directly in connection with the consummation of the
transactions contemplated under the Loan Documents to the extent included in the
calculation of consolidated net income and (xi) expenses incurred with respect
to the Chapter 11 reorganization as set forth on the Parent's consolidated
statement of income for such period, including (A) professional and other fees,
(B) key employee retention program payments, (C) financing fees, (D) severance
costs and (E) any litigation expenses incurred during or in connection with the
Cases. For purposes of this definition, the following items shall be excluded in
determining consolidated net income of a Person: (1) the income (or deficit) of
any other Person accrued prior to the date it became a Subsidiary of, or was
merged or consolidated into, such Person or any of such Person's Subsidiaries;
(2) the income (or deficit) of any other Person (other than a Subsidiary) in
which such Person has an ownership interest, except to the extent any such
income has actually been received by such Person in the form of cash dividends
or distributions; (3) any restoration to income of any contingency reserve,
except to the extent that provision for such reserve was made out of income
accrued during such period; (4) any write-up of any asset; (5) any net gain from
the collection of the proceeds of life insurance policies; (6) any net gain
arising from the acquisition of any securities, or the extinguishment, under
GAAP, of any Indebtedness, of such Person; (7) in the case of a successor to
such Person by consolidation or merger or as a transferee of its assets, any
earnings of such successor prior to such consolidation, merger or transfer of
assets; and (8) any deferred credit representing the excess of equity in any
Subsidiary of such Person at the date of acquisition of such Subsidiary over the
cost to such Person of the investment in such Subsidiary.

          "Electronic Transmission" means each notice, request, instruction,
demand, report, authorization, agreement, document, file, information and any
other communication transmitted, posted or otherwise made or communicated by
e-mail, E-Fax, Internet or extranet-based site or any other equivalent
electronic service, whether owned, operated or hosted by the Administrative
Agent, any Affiliate of the Administrative Agent or any other Person.

          "Eligible Accounts" means all of the Accounts owned by the Credit
Parties and reflected in the most recent Borrowing Base Certificate delivered by
Borrower to the Administrative Agent shall be "Eligible Accounts" for purposes
of this Agreement, except, without duplication, any Account of the Credit
Parties:


                                      A-11



               (a) that does not arise from the air transportation of
          passengers, freight and cargo or the sale of goods or performance of
          services by the Credit Parties in the ordinary course of its business;

               (b) (i) upon which any Credit Party's right to receive payment is
          not absolute or is contingent upon the fulfillment of any condition
          whatsoever or (ii) as to which any Credit Party is not able to bring
          suit or otherwise enforce its remedies against the Account Debtor
          through judicial process, or (iii) if the Account represents a
          progress billing consisting of an invoice for goods sold or used or
          services rendered pursuant to a contract under which the Account
          Debtor's obligation to pay that invoice is subject to any Credit
          Party's completion of further performance under such contract or is
          subject to the equitable lien of a surety bond issuer; provided, that
          clauses (i) and (iii) above shall not apply to receivables in respect
          of the transportation of passengers in the ordinary course of
          business;

               (c) to the extent that any defense, counterclaim, setoff or
          dispute is asserted as to such Account;

               (d) that is not a true and correct statement of bona fide
          indebtedness incurred in the amount of the Account for goods and
          services sold to or services rendered, or to be rendered with respect
          to receivables in respect of the transportation of passengers, and
          goods accepted by the applicable Account Debtor;

               (e) Eligible Unbilled Accounts;

               (f) that is owed by any director, officer, other employee or
          Affiliate of any Credit Party;

               (g) that is the obligation of an Account Debtor that is the
          United States government or a political subdivision thereof, or any
          state, county or municipality or department, agency or instrumentality
          thereof unless the Credit Party, if necessary or desirable, has
          complied with respect to such obligation with the Federal Assignment
          of Claims Act of 1940, or any applicable state, county or municipal
          law restricting the assignment thereof with respect to such obligation
          and such assignment has been accepted and acknowledged by the
          appropriate governmental officers;

               (h) that is the obligation of an Account Debtor located in (x)
          with respect to Credit Card Receivables, Korea or Brazil and (y) with
          respect to all other receivables, a foreign country other than Canada
          unless payment thereof is assured by a letter of credit assigned and
          delivered to the Administrative Agent, satisfactory to the
          Administrative Agent as to form, amount and issuer;

               (i) with respect to receivables in respect of the transportation
          of passengers, to the extent any Credit Party owed the applicable
          Account Debtor for services sold or rendered by such Account Debtor to
          such Credit Party but only to


                                      A-12



          the extent of the potential offset, including, without limitation
          under code share arrangements, interline agreements or other
          agreements between airlines in which tickets may be purchased on one
          airline and honored by another airline;

               (j) that is in default and such default is reasonably likely to
          result in such Account Debtor's failure to make payment with respect
          to such Account; provided, that, without limiting the generality of
          the foregoing, an Account shall be deemed in default upon the
          occurrence of any of the following:

               (i)  the Account is not paid within ninety (90) days following
                    its original invoice date;

               (ii) the Account Debtor obligated upon such Account suspends
                    business, makes a general assignment for the benefit of
                    creditors or fails to pay its debts generally as they come
                    due; or

               (iii) a petition is filed by or against any Account Debtor
                    obligated upon such Account under any bankruptcy law or any
                    other federal, state or foreign (including any provincial)
                    receivership, insolvency relief or other law or laws for the
                    relief of debtors;

               (k) that is the obligation of an Account Debtor if fifty percent
          (50%) or more of the Dollar amount of all Accounts owing by that
          Account Debtor are ineligible under the other criteria set forth in
          clause (j) above;

               (l) as to which the Lien of the Administrative Agent for the
          benefit of the Secured Parties is not a first priority perfected Lien;

               (m) as to which any of the representations or warranties in the
          Loan Documents with respect to such specific Account are untrue;

               (n) to the extent such Account is evidenced by a judgment,
          Instrument or Chattel Paper;

               (o) to the extent such Account exceeds any credit limit
          established by the Administrative Agent, in its reasonable credit
          judgment;

               (p) except with respect to Credit Card Receivables, to the extent
          that such Account, together with all other Accounts owing by such
          Account Debtor and its Affiliates as of any date of determination
          exceed 10% of all Eligible Accounts;

               (q) that is payable in any currency other than Dollars;

               (r) that arises from interline activity including services and
          billings performed between airlines (but excluding the transportation
          of passengers) and


                                      A-13



          the payment of which is handled through third party domestic or
          foreign clearing houses;

               (s) that arises from the sale of Delta Skymiles through DLMS to
          Amex;

               (t) that are Ineligible Refundable Ticket Accounts or Eligible
          Refundable Ticket Accounts; or

               (u) of any Credit Party which Credit Party has not been subject
          to a field examination.

          "Eligible Aircraft" means all of the Aircraft, except any Ineligible
Term A Borrowing Base Collateral, owned by the Credit Parties; provided, that
(i) a valid and enforceable first priority Lien on such Aircraft (subject only
to Permitted Encumbrances and other Liens approved by the Administrative Agent)
shall have been granted by the applicable Credit Party in favor of
Administrative Agent for the benefit of the Secured Parties pursuant to the
Aircraft Mortgage and (ii) the Liens described in clause (i) above shall be in
full force and effect in favor of Administrative Agent for the benefit of the
Secured Parties at such time.

          "Eligible Engines" means all of the Engines, except any Ineligible
Term A Borrowing Base Collateral, owned by the Credit Parties; provided, that
(i) a valid and enforceable first priority Lien on such Engine (subject only to
Permitted Encumbrances and other Liens approved by the Administrative Agent)
shall have been granted by the applicable Credit Party in favor of
Administrative Agent for the benefit of the Secured Parties pursuant to the
Aircraft Mortgage and (ii) the Liens described in clause (i) above shall be in
full force and effect in favor of Administrative Agent for the benefit of the
Secured Parties at such time.

          "Eligible Flight Simulators" means all of the Flight Simulators,
except any Ineligible Term A Borrowing Base Collateral, owned by the Credit
Parties; provided that (i) a valid and enforceable first priority Lien on such
Flight Simulators (subject only to Permitted Encumbrances and other Liens
approved by the Administrative Agent) shall have been granted by the applicable
Credit Parties in favor of Administrative Agent for the benefit of the Secured
Parties pursuant to the Loan Documents and (ii) the Liens described in clause
(i) above shall be in full force and effect in favor of Administrative Agent for
the benefit of the Secured Parties at such time.

          "Eligible Ground Service Equipment" means all Ground Service Equipment
owned by Credit Parties and reflected in the most recent Term A Borrowing Base
Certificate delivered by Borrower to the Administrative Agent, except any
Ineligible Term A Borrowing Base Collateral.

          "Eligible Real Estate" means any parcel of Owned Real Estate, except
any Ineligible Term A Borrowing Base Collateral, in the United States owned in
fee simple by the Credit Parties as to which each of the following conditions
has been satisfied at such time:

               (a) a valid and enforceable first priority Lien on such parcel of
          Real Estate (subject only to Permitted Encumbrances and other Liens
          approved by the


                                      A-14



          Administrative Agent) shall have been granted by Borrower in favor of
          Administrative Agent for the benefit of the Secured Parties pursuant
          to a Mortgage;

               (b) except as otherwise permitted by the Administrative Agent
          and, where applicable, the relevant title insurance company shall have
          received in form and substance satisfactory to the Administrative
          Agent, all Mortgage Supporting Documents in respect of such parcel;

               (c) the Administrative Agent shall have received a FIRREA
          appraisal with respect to such parcel of Real Estate in form and
          substance satisfactory to the Administrative Agent and performed by an
          appraiser that is satisfactory to the Administrative Agent;

               (d) no casualty shall have occurred affecting the use, operation
          or value of such parcel of Real Estate if such casualty has not been
          restored or repaired by the mortgagor under the Mortgage encumbering
          such parcel of Real Estate;

               (e) no condemnation or taking by eminent domain shall have
          occurred nor shall any notice of any pending or threatened
          condemnation or other proceeding against such parcel of Real Estate
          have been delivered to the owner or lessee of such parcel of Real
          Estate that would materially affect the use, operation or value of
          such parcel of Real Estate;

               (f) the mortgagor under the relevant Mortgage encumbering such
          parcel of Real Estate shall comply in all material respects with the
          terms of such Mortgage;

               (g) each written lease, license or other use or occupancy
          agreement, other than the lease between Borrower and Worldspan L.P.
          and the lease between Borrower and Verizon Airfone Inc. f/k/a GTE
          Airfone Incorporated (both of which leases are disclosed on Part 3 of
          Disclosure Schedule 3.6), now or hereafter affecting all or any
          portion of such parcel of Real Estate shall, by its express terms, be
          subject and subordinate to the relevant Mortgage; and

               (h) each lease, license, or other use or occupancy agreement
          between a Credit Party, as landlord, and its Affiliate, as tenant, now
          or hereafter affecting all or any portion of such parcel of Real
          Estate shall be subject and subordinate to the relevant Mortgage or
          shall be terminable (without fee) on 60 days' prior written notice by
          the owner of such Real Estate.

          "Eligible Refundable Ticket Accounts" means Eligible Accounts arising
from the sale of refundable tickets that are to be used within 30 days from the
date of issuance of such ticket.

          "Eligible Spare Parts" means all of the Pledged Spare Parts owned by
Credit Parties and reflected in the most recent Term A Borrowing Base
Certificate delivered by


                                      A-15



Borrower to the Administrative Agent, except for any Ineligible Term A Borrowing
Base Collateral.

          "Eligible Tooling" means all of the Tooling owned by Credit Parties
and reflected in the most recent Term A Borrowing Base Certificate delivered by
Borrower to the Administrative Agent, except any Ineligible Term A Borrowing
Base Collateral.

          "Eligible Unbilled Accounts" means Eligible Accounts with respect to
which an invoice, reasonably acceptable to the Administrative Agent in form and
substance, (it being understood that the form of invoice customarily used by the
applicable Credit Party on the Closing Date shall be deemed to be satisfactory
to the Administrative Agent) has not been sent to the applicable Account Debtor.

          "Engines" shall have the meaning ascribed to it in the Aircraft
Mortgage.

          "Entry Date" means the date of the entry of the Final Order.

          "Environmental Laws" means all applicable federal, state, local and
foreign laws, statutes, ordinances, codes, rules, standards and regulations, now
or hereafter in effect, and any applicable judicial or administrative
interpretation thereof, including any applicable judicial or administrative
order, consent decree, order or judgment, imposing liability or standards of
conduct for or relating to the regulation and protection of human health,
safety, the environment and natural resources (including ambient air, surface
water, groundwater, wetlands, land surface or subsurface strata, wildlife,
aquatic species and vegetation). Environmental Laws include CERCLA; the
Hazardous Materials Transportation Authorization Act of 1994 (49 U.S.C. Sections
5101 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
Sections 136 et seq.); the Solid Waste Disposal Act (42 U.S.C. Sections 6901 et
seq.); the Toxic Substance Control Act (15 U.S.C. Sections 2601 et seq.); the
Clean Air Act (42 U.S.C. Sections 7401 et seq.); the Federal Water Pollution
Control Act (33 U.S.C. Sections 1251 et seq.); the Occupational Safety and
Health Act (29 U.S.C. Sections 651 et seq.); and the Safe Drinking Water Act (42
U.S.C. Sections 300(f) et seq.), and any and all regulations promulgated
thereunder, and all analogous state, local and foreign counterparts or
equivalents and any transfer of ownership notification or approval statutes.

          "Environmental Liabilities" means, with respect to any Person, all
liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, arising under or related to
any Environmental Laws, Environmental Permits, or in connection with any Release
or threatened Release or presence of a Hazardous Material whether on, at, in,
under, from or about or in the vicinity of any real or personal property.


                                      A-16



          "Environmental Permits" means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.

          "ERISA Affiliate" means, with respect to any Credit Party, any trade
or business (whether or not incorporated) that, together with such Credit Party,
are treated as a single employer within the meaning of Sections 414(b), (c), (m)
or (o) of the IRC.

          "ERISA Event" means, with respect to any Credit Party or any ERISA
Affiliate, (a) any "reportable event" described in Section 4043 of ERISA with
respect to a Title IV Plan (other than a "reportable event" to which the 30-day
notice is waived under PBGC Regulation Section 4043); (b) the withdrawal of any
Credit Party or ERISA Affiliate from a Title IV Plan subject to Section 4063 of
ERISA during a plan year in which it was a substantial employer, as defined in
Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal of any
Credit Party or any ERISA Affiliate from any Multiemployer Plan; (d) the filing
of a notice of intent to terminate a Title IV Plan or the treatment of a plan
amendment as a termination under Section 4041 of ERISA; (e) the institution of
proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f)
the failure by any Credit Party or ERISA Affiliate to make when due required
contributions to a Multiemployer Plan or Title IV Plan unless such failure is
cured within thirty (30) days; (g) any other event or condition that would
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Title IV Plan
or Multiemployer Plan or for the imposition of liability under Section 4069 or
4212(c) of ERISA; (h) the termination of a Multiemployer Plan under Section
4041A of ERISA or the reorganization or insolvency of a Multiemployer Plan under
Section 4241 or 4245 of ERISA; or (i) the loss of a Qualified Plan's
qualification or tax exempt status; or (j) the termination of a Plan described
in Section 4064 of ERISA.

          "Escrow Accounts" shall mean (1) accounts of Borrower or any
Subsidiary, solely to the extent any such accounts hold funds set aside by
Borrower or any Subsidiary to manage the collection and payment of amounts
collected, withheld or incurred by Borrower or such Subsidiary for the benefit
of third parties relating to: (a) federal income tax withholding and backup
withholding tax, employment taxes, transportation excise taxes and security
related charges; (b) any and all state and local income tax withholding,
employment taxes and related charges and fees and similar taxes, charges and
fees, including, but not limited to, state and local payroll withholding taxes,
unemployment and supplemental unemployment taxes, disability taxes, workman's or
workers' compensation charges and related charges and fees; (c) state and local
taxes imposed on overall gross receipts, sales and use taxes, fuel excise taxes
and hotel occupancy taxes; (d) passenger facility fees and charges collected on
behalf of and owed to various administrators, institutions, authorities,
agencies and entities; and (e) other similar federal, state or local taxes,
charges and fees (including without limitation any amount required to be
withheld or collected under applicable law); in each case, held in escrow
accounts, trust funds or other segregated accounts in an aggregate amount for
all of such escrow accounts, trust funds and other segregated accounts not in
excess of $300,000,000, plus accrued interest; provided, that such amount may be
increased upon an increase in any of the foregoing taxes, fees


                                      A-17



and charges for which Borrower's or any Subsidiary's officers and directors may
have personal liability if not paid; or (2) accounts, capitalized interest
accounts, debt service reserve accounts and other similar accounts or funds
established in connection with the ARB Indebtedness.

          "ESOP" means a Pension Plan that is intended to satisfy the
requirements of Section 4975(e)(7) of the IRC.

          "Event of Default" has the meaning ascribed to it in Section 8.1.

          "Excess Aggregate Cash On Hand" means, as of any date, the amount by
which the actual Aggregate Cash On Hand as of such date exceeds the minimum
Aggregate Cash On Hand required to be maintained on such date by Section (c) of
Annex G.

          "Excluded Accounts" shall mean (i) the Escrow Accounts, (ii)
Restricted Accounts; and (iii) accounts located outside the United States;
provided, that the aggregate amount held in all such accounts under this clause
(iii) at any time does not exceed $90,000,000.

          "Excluded Collateral" means, collectively, (i) Excluded Accounts
(other than the Credit Parties' rights to receive any excess funds remaining in
the Escrow Accounts following the payment in full of the taxes, fees and charges
payable from such Escrow Accounts and other than the Credit Parties' rights to
receive any excess funds remaining in the Restricted Accounts), (ii) Excluded
Equity, (iii) JV Interests, (iv) Excluded Equipment, (v) Section 1110 Assets,
(vi) Avoidance Actions, (vii) any asset subject to the restrictions on Liens set
forth in Section 5.12(b), (viii) any asset excluded as Collateral in the SGR
Security Agreement (other than any Proceeds thereof that any Credit Party is
entitled to receive) and, to the extent the Administrative Agent has otherwise
consented in writing, in any other Collateral Documents.

          "Excluded Equipment" means Equipment financed, in whole or in part, by
ARB Indebtedness or otherwise to the extent the granting of a security interest
in such Equipment would constitute a breach or violation of a valid and
effective restriction in favor of a third party or give rise to any
indemnification obligations or any right to terminate or commence the exercise
of remedies under such restrictions, in each case, to the extent not subject to
the automatic stay; provided, that "Excluded Equipment" shall not include
Proceeds, substitutions or replacements of Excluded Equipment (unless such
Proceeds, substitutions or replacements would constitute Excluded Equipment),
but only to the extent, and for so long as, such restriction is not terminated
or rendered unenforceable or otherwise deemed ineffective by the Code or any
other applicable law.

          "Excluded Equity" means, collectively, (i) equity interests in the
Excluded Issuers and in any public company and (ii) any Voting Stock in excess
of 65% of the total outstanding Voting Stock of any Foreign Subsidiary of any
Credit Party. For purposes of this definition, "Voting Stock" means, as to any
issuer, the issued and outstanding shares of each class of capital stock or
other membership interests of such issuer entitled to vote (within the meaning
of Treasury Regulations Section 1.956-2(c)(2)).

          "Excluded Issuer" means (i) Delta Air Lines, Inc. and Pan American
World Airways, Inc., GMBH, (ii) Guardant, Inc., (iii) Delta Air Technology,
Ltd., (iv) Aero Assurance Ltd. and (v) New Sky, Ltd.


                                      A-18



          "Excluded Obligations" means contingent indemnification and expense
reimbursement obligations.

          "Excluded Properties" means the three real properties set forth on
Part 1 of Disclosure Schedule 3.6, the sale of which is permitted in accordance
with the Agreement.

          "Excluded Sales" means (i) the sales of spare engines and related
inventory with respect to the MD-11 aircraft sold prior to the date hereof, (ii)
the sale of the business of DAL Global Services LLC, Delta Technology, LLC,
Delta AirElite Business Jets, Inc., Delta Connection Academy, Inc. and the
technical operations (aircraft maintenance) division of Borrower, (iii) the
disposition of any Skymiles Collateral, (iv) the sale of the reservation
operations of Borrower, (v) the sale or other disposition of Permitted
Investments for cash or in exchange for Permitted Investments and (vi) the sale
of Inventory in the ordinary course of business.

          "Excluded Subsidiaries" means (i) Aero Assurance, Ltd. and its
subsidiaries and (ii) Guardant, Inc.

          "Existing Agent" means GE Capital, in each of its separate capacities
as revolving facility administrative agent, term loan administrative agent and
collateral agent for the lenders under the Existing Credit Agreement.

          "Existing Credit Agreement" means the Credit Agreement, dated as of
November 30, 2004, among Borrower, the other Credit Parties signatory thereto,
GE Capital, as the Existing Agent, and the other Lenders signatory thereto from
time to time, as amended, modified or supplemented prior to the date hereof.

          "Existing Secured Indebtedness" has the meaning ascribed to it in
Section 6.3(a)(v) hereof.

          "Existing Skymiles Facility" means the "Skymiles Facility" as such
term is defined in the Existing Credit Agreement.

          "Existing Skymiles Facility Documents" means the "Skymiles Facility
Documents" as such term is defined in the Existing Credit Agreement.

          "FAA" means the Federal Aviation Administration of the United States
of America, and any successor Governmental Authority.

          "FAA Slots" has the meaning ascribed to it in the SGR Security
Agreement.

          "Fair Labor Standards Act" means the Fair Labor Standards Act, 29
U.S.C. Section 201 et seq.

          "Fair Market Value" means (a) with respect to any asset or group of
assets (other than a marketable Security) at any date, the value of the
consideration obtainable in a sale of such asset at such date assuming a sale by
a willing seller to a willing purchaser dealing at arm's length and arranged in
an orderly manner over a reasonable period of time having regard to the


                                      A-19



nature and characteristics of such asset, as reasonably determined by the Chief
Financial Officer or Treasurer or, if such asset shall have been the subject of
an appraisal within the last twelve months by an independent third party
appraiser, the basic assumptions underlying which have not materially changed
since its date, the value set forth in such appraisal and (b) with respect to
any marketable Security at any date, the closing sale price of such Security on
the Business Day next preceding such date, as appearing in any published list of
any national securities exchange or the NASDAQ Stock Market or, if there is no
such closing sale price of such Security, the final price for the purchase of
such Security at face value quoted on such Business Day by a financial
institution of recognized standing regularly dealing in Securities of such type
and selected by the Administrative Agent.

          "Federal Funds Rate" means, for any day, a floating rate equal to the
weighted average of the rates on overnight federal funds transactions among
members of the Federal Reserve System, as determined by the Administrative Agent
in its sole discretion, which determination shall be final, binding and
conclusive (absent manifest error).

          "Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.

          "Fee Letters" means, collectively, the Arrangement Fee Letter and the
DIP Fee Letter.

          "Fees" means any and all fees payable to the Administrative Agent or
any Lender pursuant to the Agreement or any of the other Loan Documents.

          "Final Order" means an order, approving or authorizing this Agreement
and the other Loan Documents and the incurrence by the Credit Parties hereunder
of post-petition secured and super-priority Indebtedness in an aggregate
principal amount of not less than $1,700,000,000 in accordance with this
Agreement, issued by the Bankruptcy Court in form and substance satisfactory to
the Administrative Agent, the Arrangers and the Requisite Lenders.

          "Financial Covenants" means the financial covenants set forth in Annex
G.

          "Financial Statements" means the consolidated and consolidating income
statements, statements of cash flows and balance sheets of Borrower delivered in
accordance with Section 3.4 and Annex E.

          "First Day Orders" means all orders entered by the Bankruptcy Court in
respect of motions filed on the Petition Date or within five Business Days
thereafter.

          "Fiscal Month" means any of the monthly accounting periods of
Borrower.

          "Fiscal Quarter" means any of the quarterly accounting periods of
Borrower, ending on March 31, June 30, September 30 and December 31 of each
year.

          "Fiscal Year" means any of the annual accounting periods of Borrower
ending on December 31 of each year.


                                      A-20



          "Fixtures" means all "fixtures" as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party.

          "Flight Simulators" means the flight simulators and flight training
devices of Borrower or any Subsidiary.

          "Foreign Aviation Authority" shall have the meaning ascribed to it in
the SGR Security Agreement.

          "Foreign Subsidiary" means any Subsidiary which is a "controlled
foreign corporation" within the meaning of the Internal Revenue Code of 1986, as
amended from time to time.

          "Foreign Slots" has the meaning ascribed to it in the SGR Security
Agreement.

          "GAAP" means generally accepted accounting principles in the United
States of America, consistently applied, as such term is further defined in
Annex G to the Agreement.

          "Gates" shall have the meaning ascribed to it in the SGR Security
Agreement.

          "GE Capital" means General Electric Capital Corporation, a Delaware
corporation.

          "GE Capital Commitment Letter" means the Commitment Letter, dated
September 10, 2005, between GE Capital and Borrower.

          "General Intangibles" means "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
including all right, title and interest that such Credit Party may now or
hereafter have in or under any Contract, all payment intangibles, customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, Software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, rights to receive tax
refunds and other payments, rights to receive dividends, distributions, cash,
Instruments and other property in respect of or in exchange for pledged Stock
and Investment Property, rights of indemnification, all Books and Records,
correspondence, credit files, invoices and other papers, including without
limitation all tapes, cards, computer runs and other papers and documents in the
possession or under the control of such Credit Party or any computer bureau or
service company from time to time acting for such Credit Party.


                                      A-21



          "Governmental Authority" means any nation or government, any state or
other political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including but not limited to, any
Aviation Authority.

          "Granting Lender" has the meaning ascribed to it in Section 11.1(e).

          "Ground Service Equipment" means ground service equipment, de-icers,
ground support equipment, aircraft cleaning devices, materials handling
equipment and other similar equipment used to service equipment.

          "Guaranteed Indebtedness" means, as to any Person, any obligation of
such Person guaranteeing, providing comfort or otherwise supporting any
Indebtedness ("primary obligation") of any other Person (the "primary obligor")
in any manner, including any obligation or arrangement of such Person to (a)
purchase or repurchase any such primary obligation, (b) advance or supply funds
(i) for the purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency or any balance sheet condition of the
primary obligor, (c) purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, (d) protect the
beneficiary of such arrangement from loss (other than product warranties given
in the ordinary course of business) or (e) indemnify the owner of such primary
obligation against loss in respect thereof. The amount of any Guaranteed
Indebtedness at any time shall be deemed to be an amount equal to the lesser at
such time of (x) the stated or determinable amount of the primary obligation in
respect of which such Guaranteed Indebtedness is incurred and (y) the maximum
amount for which such Person may be liable pursuant to the terms of the
instrument embodying such Guaranteed Indebtedness, or, if not stated or
determinable, the maximum reasonably anticipated liability (assuming full
performance) in respect thereof.

          "Guarantors" means each Domestic Subsidiary of Borrower, other than
the Excluded Subsidiaries, and each other Person, if any, that executes a
guaranty or other similar agreement in favor of Administrative Agent for the
benefit of the Secured Parties in connection with the transactions contemplated
by the Agreement and the other Loan Documents.

          "Hazardous Material" means any substance, material or waste that is
regulated by, or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance that is (a) defined as a
"solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, or (b) petroleum or
any fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's),
or any radioactive substance.

          "Hedging Obligations" has the meaning ascribed to it in the definition
of "Indebtedness."

          "IATA" means International Air Transport Association.


                                      A-22



          "Indebtedness" means, with respect to any Person, without duplication
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property payment for which is deferred six (6) months or more,
but excluding obligations to trade creditors incurred in the ordinary course of
business that are not overdue by more than six (6) months unless being contested
in good faith, (b) all reimbursement and other obligations with respect to
letters of credit, bankers' acceptances and surety bonds, whether or not
matured, (c) all obligations evidenced by notes, bonds, debentures or similar
instruments, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations and the present value (discounted
at the Index Rate as in effect on the Closing Date) of future rental payments
under all synthetic leases, (f) all obligations of such Person under commodity
purchase or option agreements or other commodity price hedging arrangements, in
each case whether contingent or matured, (g) all obligations of such Person
under any foreign exchange contract, currency swap agreement, interest rate
swap, cap or collar agreement or other similar agreement or arrangement designed
to alter the risks of that Person arising from fluctuations in currency values
or interest rates, in each case whether contingent or matured (collectively,
"Hedging Obligations"), (h) all Indebtedness referred to above secured by (or
for which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property or other assets
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
and (i) the Obligations, but excluding any claims arising upon the rejection of
unexpired leases and other executory contracts.

          "Indemnified Liabilities" has the meaning ascribed to it in Section
1.11(a).

          "Indemnified Person" has the meaning ascribed to it in Section
1.11(a).

          "Index Rate" means, for any day, a floating rate equal to the higher
of (i) the rate publicly quoted from time to time by The Wall Street Journal as
the "prime rate" (or, if The Wall Street Journal ceases quoting a prime rate,
the highest per annum rate of interest published by the Federal Reserve Board in
Federal Reserve statistical release H.15 (519) entitled "Selected Interest
Rates" as the Bank prime loan rate or its equivalent), and (ii) the Federal
Funds Rate plus 50 basis points per annum. Each change in any interest rate
provided for in the Agreement based upon the Index Rate shall take effect at the
time of such change in the Index Rate.

          "Index Rate Loan" means a Loan or portion thereof bearing interest by
reference to the Index Rate.

          "Ineligible Refundable Ticket Accounts" means Accounts arising from
the sale of refundable tickets that are to be used later than 30 days from the
date of issuance of such ticket.

          "Ineligible Term A Borrowing Base Collateral" means any Aircraft,
Engines, Tooling, Flight Simulators, Ground Service Equipment and Spare Parts
that:


                                      A-23



          (a) is not subject to a valid and enforceable first priority Lien on
     such Collateral (subject only to Permitted Encumbrances and other Liens
     approved by the Administrative Agent) granted by the applicable Credit
     Party in favor of Administrative Agent for the benefit of the Secured
     Parties pursuant to a Collateral Document;

          (b) is not located on premises (i) leased by Credit Party or (ii)
     owned by Credit Party and subject to a valid and enforceable first priority
     Mortgage in favor of Administrative Agent for the benefit of the Secured
     Parties pursuant to a Collateral Document;

          (c) is placed on consignment, is in transit or out for repair, except
     for Collateral (other than Spare Parts) in transit between domestic
     locations of Credit Parties as to which Liens of Administrative Agent for
     the benefit of the Secured Parties have been perfected at origin and
     destination;

          (d) is covered by a negotiable document of title, unless such document
     has been delivered to the Administrative Agent with all necessary
     endorsements,

          (e) is not of a type used in the ordinary course of Credit Parties'
     business;

          (f) as to which any of the representations or warranties pertaining to
     Collateral set forth in the Loan Documents are untrue;

          (g) consists of Hazardous Materials or goods that can be transported
     or sold only with licenses that are not readily available;

          (h) is not covered by casualty insurance required to be maintained
     under the Collateral Documents;

          (i) is subject to any patent or trademark license requiring the
     payment of royalties or fees or requiring the consent of the licensor for a
     sale thereof by the Administrative Agent;

          (j) constitutes Technology Equipment;

          (k) has not been appraised in accordance with Section 5.20 of the
     Agreement; or

          (l) with respect to any Aircraft or Engine, as to which Borrower fails
     to cure a Maintenance Default during the Maintenance Cure Period.

          "Instruments" means all "instruments," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located,
and, in any event, including all promissory notes and other evidences of
indebtedness, other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.

          "Intellectual Property" means any and all Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such Trademarks, and
Technology.


                                      A-24



          "Intercompany Notes" has the meaning ascribed to it in Section
6.3(a)(vii).

          "Interest Expense" means, with respect to any Person for any fiscal
period, interest expense (whether cash or non-cash) of such Person determined in
accordance with GAAP for the relevant period ended on such date.

          "Interest Payment Date" means (a) as to any Index Rate Loan, the first
Business Day of each month to occur while such Loan is outstanding, and (b) as
to any LIBOR Loan, the last day of the applicable LIBOR Period; provided, that
in the case of any LIBOR Period greater than three months in duration, interest
shall be payable at three month intervals and on the last day of such LIBOR
Period; and provided, further that, in addition to the foregoing, each of (x)
the date upon which all of the Commitments have been terminated and the Loans
have been paid in full and (y) the Maturity Date shall be deemed to be an
"Interest Payment Date" with respect to any interest that has then accrued under
the Agreement.

          "Interim Order" means an order, approving or authorizing Loans in an
aggregate principal amount of not less than $1,400,000,000, issued by the
Bankruptcy Court in substantially the form of Exhibit I and otherwise in form
and substance satisfactory to the Administrative Agent and the Arrangers.

          "Inventory" means any "inventory," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located, and
in any event including inventory, merchandise, goods and other personal property
that are held by or on behalf of any Credit Party for sale or lease or are
furnished or are to be furnished under a contract of service, or that constitute
raw materials, work in process, finished goods, returned goods, supplies or
materials of any kind, nature or description used or consumed or to be used or
consumed in such Credit Party's business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including all supplies
and embedded Software.

          "Investment Property" means all "investment property" as such term is
defined in the Code now owned or hereafter acquired by any Credit Party,
wherever located, including (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of such Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts of any Credit Party;
(iv) all commodity contracts of any Credit Party; and (v) all commodity accounts
held by any Credit Party.

          "Investments" has the meaning ascribed to it in Section 6.2.

          "IRC" means the Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder.

          "IRS" means the Internal Revenue Service.


                                      A-25



          "JV Interests" means any joint venture interest held by any Credit
Party to the extent such Credit Party is restricted from assigning or pledging
such interest pursuant to legally binding arrangements between the joint venture
parties; provided, that "JV Interests" shall not include any Proceeds of such
property.

          "L/C Issuer" has the meaning ascribed to it in Annex B.

          "L/C Cash Collateral Account" means a cash collateral account
maintained at a bank or financial institution acceptable to the Administrative
Agent, subject to a Blocked Account Agreement, into which cash or Cash
Equivalents are deposited pursuant to Annex B.

          "Letter of Credit" means each documentary or standby letters of credit
issued under the Loan Documents for the account of Borrower or any of the Credit
Parties by any L/C Issuer.

          "Letter of Credit Obligations" means the sum, without duplication, of
(i) the amount available for drawing under all outstanding Letters of Credit and
(ii) the aggregate unpaid amount of all outstanding reimbursement obligations in
respect of previous drawings under Letters of Credit.

          "Letter of Credit Rights" means "letter-of-credit rights" as such term
is defined in the Code, now owned or hereafter acquired by any Credit Party,
including rights to payment or performance under a letter of credit, whether or
not such Credit Party, as beneficiary, has demanded or is entitled to demand
payment or performance.

          "Lenders" means GE Capital, the other Lenders named on the signature
pages of the Agreement and, if any such Lender shall decide to assign all or any
portion of the Obligations in accordance with Section 11.1(a), such term shall
include any assignee of such Lender.

          "Liabilities" means all claims, actions, suits, judgments, damages,
losses, liability, obligations, responsibilities, fines, penalties, sanctions,
costs, fees, taxes, commissions, charges, disbursements and expenses, in each
case of any kind or nature (including interest accrued thereon or as a result
thereto and fees, charges and disbursements of financial, legal and other
advisors and consultants), whether joint or several, whether or not indirect,
contingent, consequential, actual, punitive, treble or otherwise.

          "LIBOR Business Day" means a Business Day on which banks in the City
of London are generally open for interbank or foreign exchange transactions.

          "LIBOR Loan" means a Loan or any portion thereof bearing interest by
reference to the LIBOR Rate.

          "LIBOR Period" means, with respect to any LIBOR Loan, each period
commencing on a LIBOR Business Day selected by Borrower pursuant to the
Agreement and ending one, two, three or six months thereafter, as selected by
Borrower's irrevocable notice to the Administrative Agent as set forth in
Section 1.5(e); provided, that the foregoing provision relating to LIBOR Periods
is subject to the following:


                                      A-26



          (a) if any LIBOR Period would otherwise end on a day that is not a
     LIBOR Business Day, such LIBOR Period shall be extended to the next
     succeeding LIBOR Business Day unless the result of such extension would be
     to carry such LIBOR Period into another calendar month in which event such
     LIBOR Period shall end on the immediately preceding LIBOR Business Day;

          (b) any LIBOR Period that would otherwise extend beyond the Maturity
     Date shall end on or prior to such date;

          (c) any LIBOR Period that begins on the last LIBOR Business Day of a
     calendar month (or on a day for which there is no numerically corresponding
     day in the calendar month at the end of such LIBOR Period) shall end on the
     last LIBOR Business Day of a calendar month; and

          (e) Borrower shall select LIBOR Periods so that there shall be no more
     than 5 separate LIBOR Loans in existence at any one time.

          "LIBOR Rate" means for each LIBOR Period, a rate of interest
determined by the Administrative Agent equal to the offered rate for deposits in
United States Dollars for the applicable LIBOR Period that appears on Telerate
Page 3750 as of 11:00 a.m. (London time), on the second full LIBOR Business Day
next preceding the first day of such LIBOR Period (unless such date is not a
Business Day, in which event the next succeeding Business Day will be used). If
such interest rates shall cease to be available from Telerate News Service, the
LIBOR Rate shall be determined from such financial reporting service or other
information as shall be mutually acceptable to the Administrative Agent and
Borrower.

          "License" means any Copyright License, Patent License, Trademark
License or other similar license of rights or interests now held or hereafter
acquired by any Credit Party.

          "Lien" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any capital
lease or conditional sale agreement, and any financing lease having
substantially the same economic effect as any of the foregoing).

          "Litigation" has the meaning ascribed to it in Section 3.13.

          "Loan" means any loan made by any Lender pursuant to this Agreement.

          "Loan Account" has the meaning ascribed to it in Section 1.10.

          "Loan Documents" means the Agreement, the Notes, the Collateral
Documents, the Fee Letters, Borrowing Base Certificates and all other
agreements, instruments, documents and certificates executed and delivered to,
or in favor of, the Administrative Agent or any Lender in connection with the
Agreement and the transactions contemplated thereby and including all other
pledges, powers of attorney, consents, assignments, contracts, notices, letter
of credit agreements and all other written agreements whether heretofore, now or
hereafter executed by or on behalf of any Credit Party and delivered to the
Administrative Agent or any Lender in


                                      A-27



connection with the Agreement or the transactions contemplated thereby. Any
reference in the Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to the
Agreement or such Loan Document as the same may be in effect at any and all
times such reference becomes operative.

          "Maintenance Cure Period" has the meaning ascribed to it in Section
8.1(d).

          "Maintenance Default" has the meaning ascribed to it in Section
8.1(d).

          "Margin Stock" has the meaning ascribed to it in Section 3.10.

          "Master Documentary Agreement" means the Master Agreement for
Documentary Letters of Credit between Borrower, as Applicant, and GE Capital, as
L/C Issuer, to be executed prior to issuance of any Letter of Credit, in form
and substance reasonably satisfactory to the Administrative Agent.

          "Master Standby Agreement" means the Master Agreement for Standby
Letters of Credit between Borrower, as Applicant, and GE Capital, as L/C Issuer,
to be executed prior to issuance of any Letter of Credit, in form and substance
reasonably satisfactory to the Administrative Agent.

          "Material Adverse Effect" means a material adverse effect on (i) the
business, assets, operations or financial or other condition or prospects of (x)
Borrower or (y) the Credit Parties taken as a whole (other than the commencement
of the Cases and events customarily leading up to and following the commencement
of the Cases or otherwise reflected in the operating budget dated September 9,
2005 provided to the Administrative Agent), (ii) the ability of Borrower or
Guarantors to pay any of the Loans or any of the other Obligations in accordance
with the terms of the Agreement, (iii) the Collateral, the Liens of
Administrative Agent for the benefit of the Secured Parties on the Collateral,
or the priority of such Liens, or (iv) the Administrative Agent's or Lender's
rights and remedies under the Agreement and the other Loan Documents.

          "Material Location" has the meaning ascribed to it in Section 5.8.

          "Material Real Estate Contracts" means (for purposes of the Agreement
only) any lease, usufruct, use agreement, license, permit or other occupancy or
facility use agreement under which a Credit Party is a tenant or counterparty,
that has a remaining term of three (3) years or more as of the Closing Date and
(i) subject to receipt of any necessary consents, could be assigned to another
user for a cash payment in excess $10,000,000 with a novation of such Credit
Party, or (ii) relates to major facilities required for a Credit Party's
operations, the loss of the lease, usufruct, use agreement, license, permit or
other occupancy or facility use agreement with respect thereto would materially
and adversely affect a Credit Party's ability to conduct its business as now
being conducted.

          "Maturity Date" the earliest of (a) Scheduled Maturity Date, (b) the
effective date of a Plan of Reorganization and (c) the date of termination of
Lenders' obligations to permit existing Loans to remain outstanding pursuant to
Section 8.2(b).


                                      A-28



          "Moody's" means Moody's Investors Service, Inc.

          "Mortgage" means each of the mortgages, deeds to secured debt, deeds
of trust or other real estate security documents delivered by any Credit Party
to the Administrative Agent on behalf of itself and Lenders with respect to the
Mortgaged Properties, substantially in the form attached as Exhibit D hereto.

          "Mortgage Supporting Documents" means, with respect to a Mortgage for
a parcel of Real Estate, each of the following:

          (i) (i) evidence in form and substance reasonably satisfactory to the
          Administrative Agent that the recording of counterparts of such
          Mortgage in the recording offices specified in such Mortgage will
          create a valid, perfected and enforceable first priority lien on
          property described therein in favor of Administrative Agent for the
          benefit of the Secured Parties (or in favor of such other trustee as
          may be required or desired under local law) subject only to (A)
          Permitted Encumbrances and (B) such other Liens as the Administrative
          Agent may reasonably approve and (ii) an opinion of counsel in each
          state in which any such Mortgage is to be recorded in form and
          substance and from counsel reasonably satisfactory to the
          Administrative Agent;

          (j) if requested by the Administrative Agent in its reasonable
          discretion, (i) a mortgagee's title policy (or policies) or marked-up
          unconditional binder (or binders) for such insurance (or other
          evidence reasonably acceptable to the Administrative Agent proving
          ownership thereof) ("Mortgagee's Title Insurance Policy"), dated a
          date satisfactory to the Administrative Agent, and shall (A) be in an
          amount equal to 110% of the appraised value (determined by reference
          to the initial FIRREA appraisals) of such parcel of Real Estate, (B)
          be issued at ordinary rates, (C) insure that the Lien granted pursuant
          to the Mortgage insured thereby creates a valid first priority Lien on
          such parcel of Real Estate free and clear of all defects and
          encumbrances, except for Permitted Encumbrances and for such defects
          and encumbrances as may be approved by the Administrative Agent, (D)
          name Administrative Agent for the benefit of the Secured Parties as
          the insured thereunder, (E) be in the form of ALTA Loan Policy - 1992
          (or such local equivalent thereof as is reasonably satisfactory to the
          Administrative Agent), (F) contain such endorsements and affirmative
          coverage as the Administrative Agent may request to the extent
          available in the applicable jurisdictions (including but not limited
          to a comprehensive lender's endorsement, a zoning endorsement and a
          floating rate endorsement), (G) be issued by Lawyers Title Insurance
          Corporation, Chicago Title Insurance Company or any other title
          company reasonably satisfactory to the Administrative Agent (including
          any such title companies acting as co-insurers or reinsurers), (H)
          delete the general survey exception, and (I) be otherwise in form and
          substance reasonably satisfactory to the Administrative Agent and (ii)
          a copy of all documents referred to, or listed as exceptions to title,
          in such title policy (or policies) in each case in form and substance
          reasonably satisfactory to the Administrative Agent;


                                      A-29



          (k) as-built surveys of such parcel of Real Estate certified to and
          received by (in a manner reasonably satisfactory to each of them)
          Administrative Agent for the benefit of the Secured Parties and, if
          the Administrative Agent requires a Mortgage Title Insurance Policy
          pursuant to clause (a) above, the title insurance company issuing the
          Mortgagee's Title Insurance Policy for such Mortgage, dated a date
          reasonably satisfactory to the Administrative Agent and such title
          insurance company, by an independent professional licensed land
          surveyor reasonably satisfactory to the Administrative Agent and such
          title insurance company, which maps or plats and the surveys on which
          they are based shall be made in form and substance reasonably
          satisfactory to the Administrative Agent;

          (l) evidence in form and substance reasonably satisfactory to the
          Administrative Agent that all premiums in respect of each Mortgagee's
          Title Insurance Policy, all recording fees and stamp, documentary,
          intangible or mortgage taxes, if any, in connection with the Mortgage
          have been paid;

          (m) a Phase I environmental report with respect to such parcel of Real
          Estate, dated a date not more than one year prior to November 30,
          2004, showing no material condition of environmental concern and
          otherwise in form and substance reasonably satisfactory to the
          Administrative Agent; and

          (n) such other agreements, documents and instruments in form and
          substance reasonably satisfactory to the Administrative Agent as the
          Administrative Agent deems necessary or appropriate to create,
          register or otherwise perfect, maintain, evidence the existence,
          substance, form or validity of, or enforce a valid and enforceable
          first priority lien on such parcel of Real Estate in favor of
          Administrative Agent for the benefit of the Secured Parties (or in
          favor of such other trustee as may be required or desired under local
          law) subject only to Permitted Encumbrances.

          "Mortgaged Properties" has the meaning ascribed to it in Annex D.

          "Mortgagee's Title Insurance Policy" has the meaning ascribed to it in
the definition of "Mortgage Supporting Documents".

          "Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is
making, is obligated to make or has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.

          "Net Capital Expenditures" means, for any period, Capital Expenditures
for such period plus (without duplication) (i) any increases in the aggregate
amount of advances or deposits made in connection with Capital Expenditures
during such period, and (ii) the amount by which the aggregate principal amount
of any Indebtedness incurred pursuant to Section 6.3(a)(i) ("Purchase Money
Debt") was reduced in connection with any refinancing of interim Purchase Money
Debt during such period, minus (without duplication) (x) the aggregate principal
amount of any Purchase Money Debt incurred during such period, including without


                                      A-30



limitation in connection with any increase in Purchase Money Debt incurred in
connection with any refinancing of interim Purchase Money Debt, and (y) any
decreases in advances or deposits made in connection with Capital Expenditures
during such period.

          "Net Cash Proceeds" means proceeds received by any Credit Party after
the Closing Date in cash or Cash Equivalents from:

          (a) (i) Asset Sales permitted under Section 6.8(a) in excess of
$5,000,000, individually or in the aggregate, for any Fiscal Year (other than
(x) Asset Sales of Aircraft and (y) any single Asset Sale resulting in gross
proceeds not exceeding $5,000), (ii) Asset Sales of any Collateral included in
the Term A Borrowing Base permitted under Section 6.8(c)(ii), (iii) any Excluded
Sales permitted under Section 6.8(d) resulting in gross proceeds in excess of
$50,000,000, individually or in the aggregate, and (iv) any other Asset Sale
(other than (A) any Asset Sale permitted under Sections 6.8(c)(i), (e), (f),
(g), (i), (j), (k), (l), (n) (other than sales of Section 1110 Assets or
Non-1110 Aviation Assets) or (o) or (B) any single Asset Sale resulting in gross
proceeds not exceeding $5,000), in excess of $5,000,000, individually or in the
aggregate, for any Fiscal Year for all such Asset Sales, in each case, net of
(1) the reasonable cash costs of sale, assignment or other disposition, (2)
taxes paid or reasonably estimated to be payable as a result thereof, (3)
reserves provided, to the extent required by GAAP, against any liabilities that
are directly attributed to such Asset Sale (clauses (1), (2) and (3)
collectively referred to herein as the "Sale Costs") and (4) any amount required
to be paid or prepaid on Indebtedness or other obligations (other than the
Obligations) secured by the assets subject to such Asset Sale, or otherwise
required to be repaid as a result of such Asset Sale; provided, that, in the
case of any Asset Sale permitted under Section 6.8(m), "Net Cash Proceeds" shall
be deemed net of the purchase price of the assets subject to such Asset Sale;
and

          (b) Property Loss Event, net of (1) the costs of collection (the
"Collection Costs" and, together with the Sale Costs, "Costs"), (2) the amounts
required to be applied pursuant to the terms of any ARB Indebtedness in respect
of any asset subject thereto, (3) any amounts required to be applied as
described in Section 5.4(d) and (4) any amount required to be paid or prepaid on
Indebtedness or other obligations (other than the Obligations) secured by the
assets subject to such Property Loss Event, or otherwise required to be repaid
as a result of such Property Loss Event;

          provided, that, if the aggregate Costs related to any Asset Sale or
any Property Loss Event exceeds $500,000, evidence of each such Costs shall be
provided to the Administrative Agent, in form and substance reasonably
satisfactory to them.

          "Net Orderly Liquidation Value" shall mean with regard to any Eligible
Aircraft, Eligible Engines, Eligible Spare Parts, Eligible Ground Service
Equipment, Eligible Flight Simulators or Eligible Tooling, the net orderly
liquidation value of such Eligible Aircraft, Eligible Spare Parts, Eligible
Ground Service Equipment, Eligible Flight Simulators or Eligible Tooling, as the
case may be, as determined by reference to the most recent appraisal of the
applicable Credit Party.

          "Non-Funding Lender" has the meaning ascribed to it in Section
11.9(a).


                                      A-31



          "Non-1110 Agreement" shall mean any agreement related to property that
would have qualified as "equipment," as such term is used in Section 1110(a)(3)
of the Bankruptcy Code if it had been placed in service on or prior to October
22, 1994, including, without limitation, security agreements, mortgages, trusts,
leases, conditional sale agreements or other instruments applicable to such
property.

          "Non-1110 Aviation Assets" shall mean (a) property that would have
qualified as "equipment," as such term is used in Section 1110(a)(3) of the
Bankruptcy Code if it had been placed in service on or prior to October 22, 1994
and all Non-1110 Agreements, to the extent that the Credit Parties are
prohibited from granting liens thereon or assignments thereof under the terms of
any such agreements in effect at the commencement of the Cases (and to the
extent permitted by this Agreement, as such Non-1110 Agreement may be amended,
modified, refinanced or restructured), (b) any other asset with respect to which
the granting of any lien would cause a default, directly or indirectly, of any
such Non-1110 Agreements, (c) any deposits and reserves held or maintained
pursuant to such agreement or (d) property referred to in the previous clause
that the Borrower or any of the Guarantors elects to return to the party
providing financing therefor in exchange for a discharge of the related
indebtedness; provided, that Non-1110 Aviation Assets shall not include any
Proceeds of such property (but only to the extent that the Credit Parties are
entitled to such Proceeds).

          "Non-Stayed Order" means an order of the Bankruptcy Court which is in
full force and effect, as to which no stay has been entered and which has not
been reversed, modified, vacated or overturned.

          "Note" has the meaning assigned to it in Section 1.1(a).

          "Notice of Actionable Default" has the meaning ascribed to it in the
Skymiles Intercreditor Agreement.

          "Notice of Conversion/Continuation" has the meaning ascribed to it in
Section 1.5(e).

          "Obligations" means all loans, advances, debts, liabilities and
obligations, for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to the Administrative Agent or any Lender, and all covenants and duties
regarding such amounts, of any kind or nature, present or future, whether or not
evidenced by any note, agreement, letter of credit agreement or other
instrument, arising under the Agreement or any of the other Loan Documents. This
term includes all principal, interest (including all interest that accrues after
the commencement of any case or proceeding by or against any Credit Party in
bankruptcy, whether or not allowed in such case or proceeding), Fees, expenses,
attorneys' fees and any other sum chargeable to any Credit Party under the
Agreement or any of the other Loan Documents.

          "Op Specs" means Operating Specifications issued by the FAA under Part
121 of the Federal Aviation Regulations authorizing an air carrier's operations
to/from/within the United States.


                                      A-32



          "Orders" means the Interim Order or the Final Order, as applicable.

          "Original Borrowing Base Assets" has the meaning ascribed to it in
Section 1.2(c)(i).

          "Owned Real Estate" has the meaning ascribed to it in Section 3.6(b)
and Section 5.12(a)(iv).

          "Patent License" means rights under any written agreement now owned or
hereafter acquired by any Credit Party granting any right with respect to any
invention on which a Patent is in existence.

          "Patent Security Agreements" means the Patent Security Agreements made
in favor of Administrative Agent for the benefit of the Secured Parties by each
applicable Credit Party.

          "Patents" means all of the following in which any Credit Party now
holds or hereafter acquires any interest: (a) all letters patent of the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or of any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or any other country, and (b) all reissues, continuations,
continuations-in-part or extensions thereof.

          "PBGC" means the Pension Benefit Guaranty Corporation.

          "Pension Plan" means a Plan which is an "employee pension benefit
plan" described in Section 3(2) of ERISA.

          "Permits" has the meaning ascribed to it in Section 3.24.

          "Permitted Encumbrances" means the following encumbrances: (a) Liens
for taxes or assessments or other governmental Charges not yet due and payable
or which are being contested in accordance with Section 5.2(b); (b) pledges or
deposits of money securing statutory obligations under workmen's compensation,
unemployment insurance, social security or public liability laws or similar
legislation (excluding Liens under ERISA); (c) pledges or deposits of money
securing bids, tenders, contracts (other than contracts for the payment of
money) or leases (other than leases of aircraft) to which any Credit Party is a
party as lessee made in the ordinary course of business; (d) workers',
mechanics' or similar liens arising in the ordinary course of business, so long
as such Liens are inchoate and unperfected and attach only to Tooling, Fixtures
and/or real estate or being contested in accordance with Section 5.2(b); (e)
carriers', warehousemen's, suppliers' or other similar possessory liens arising
in the ordinary course of business so long as such Liens are inchoate and
unperfected and attach only to Inventory or being contested in accordance with
Section 5.2(b); (f) deposits securing, or in lieu of, surety, appeal or customs
bonds in proceedings to which any Credit Party is a party; (g) any attachment or
judgment lien not constituting an Event of Default under Section 8.1(i); (h)
zoning restrictions, easements, licenses, or other restrictions on the use of
any real estate or interests of any Credit Party in real estate or other minor
irregularities in title (including leasehold title) thereto, so long as the same
do not materially impair the use or the value of any parcel of Owned


                                      A-33



Real Estate; (i) presently existing or hereafter created Liens in favor of
Administrative Agent for the benefit of the Secured Parties; (j) statutory and
common law landlords' liens under leases to which any Credit Party is a party
(subject to the requirements of Section 5.8); (k) (i) leases, subleases,
licenses, permits and similar use rights, entered into in the ordinary course of
business with respect to the Owned Real Estate, that are by their express terms
subject and subordinate to Administrative Agent's Liens, for the benefit of
Secured Parties, in the Owned Real Estate, and do not, in the aggregate,
materially detract from the value of the any parcel of Owned Real Estate and
(ii) leases, subleases, licenses, permits and similar use rights, entered into
in the ordinary course of business with respect to any leased real estate, to
the extent they are not prohibited by the Collateral Documents and would not
have a Material Adverse Effect and would not materially and adversely affect the
Administrative Agent's Liens, for the benefit of Secured Parties, in Collateral
stored or located at such location; (l) with respect to Real Estate, other
defects and encumbrances as may be approved by the Administrative Agent,
including, with respect to the Eligible Real Estate, any matters shown as title
exceptions in the Mortgagee's Title Insurance Policy, (m) liens imposed by
applicable law on the assets of any Credit Party located at an airport for the
benefit of an Aviation Authority; (n) Liens (including leases) permitted
pursuant to the Aircraft Mortgage and (o) subject, with respect to Blocked
Accounts, to the Blocked Account Agreements, Liens in favor of depositary banks
(including set-off rights) arising as a matter of law.

          "Permitted Investments" means Investments made in accordance with the
Investment Guidelines set forth on Annex K.

          "Permitted Liens" means (i) Liens granted by the Credit Parties under
the Collateral Documents and (ii) any other Liens permitted to be created or
assumed or to exist pursuant to Section 6.7 of this Agreement.

          "Permitted Prepetition Payment" means a payment (as adequate
protection or otherwise) on account of any Claim against any Credit Party
arising or deemed to have arisen prior to the Petition Date, which payments are
(i) authorized by the Bankruptcy Court pursuant to First Day Orders or other
Non-Stayed Orders reasonably satisfactory to the Administrative Agent in amounts
approved by the Bankruptcy Court and the Administrative Agent, (ii) made
pursuant to an agreement relating to Section 1110 Assets, (iii) made in
connection with the assumption of executory contracts and unexpired leases or
(iv) made in respect of accrued payroll and related expenses and employee
benefits as of the Petition Date.

          "Permitted Refinancing" means, with respect to any Person, any
modification, refinancing, refunding, renewal, extension or replacement
(collectively, a "refinancing") of any Indebtedness of such Person; provided,
that (a) the principal amount (or accreted value, if applicable) thereof does
not exceed 100% (or, to the extent no payment of principal thereof (except upon
acceleration) is required on or prior to the Scheduled Maturity Date, 105%) of
the principal amount (or accreted value, if applicable) of the Indebtedness so
refinanced, except by an amount equal to the unpaid accrued interest and premium
thereon; (b) such refinancing has a final maturity date equal to or later than
the final maturity of the Indebtedness being refinanced, (c) such refinancing
does not reduce the weighted average life to maturity of the Indebtedness being
refinanced, (d) if the Indebtedness being refinanced is subordinated in right of
payment to the Obligations, such refinancing is subordinated in right of payment
to the Obligations on terms


                                      A-34



at least as favorable to Lenders as those contained in the documentation
governing the Indebtedness being refinanced. Permitted Refinancings shall
include any refinancing financed with proceeds from or exchanges into Stock
issued by Borrower.

          "Permitted Reinvestment Collateral" means, with respect to any
Collateral, (i) replacement assets useful in Borrower's (or, in the case of any
asset owned by any Subsidiary, such Subsidiary's) business or, in the case of
any Property Loss Event, repairs to the applicable Collateral, (ii) in the case
of any Property Loss Event with respect to any Collateral included in the Term A
Borrowing Base (other than Aircraft or Engines), replacement assets consisting
of like-kind assets and the Allocated Amount for which exceeds the Allocated
Amount for the Original Borrowing Base Assets after replacement or repair, as
the case may be, and (iii) in the case of Aircraft or Engines, Replacement
Aircraft or Replacement Engines, as the case may be; provided, that, in each
case, any replacement asset shall be subject to a first priority Lien of
Administrative Agent for the benefit of Secured Parties to the extent that the
original asset was subject to a first priority Lien of Administrative Agent for
the benefit of Secured Parties.

          "Permitted Secured Financing" has the meaning ascribed to it in
Section 6.3(a)(v) hereof.

          "Permitted Subordinated Indebtedness" means any unsecured Indebtedness
of any Delta Company that (a) is expressly subordinated to the prior payment in
full in cash of the Obligations on terms reasonably acceptable to the
Administrative Agent, (b) will not mature prior to the date that is ninety-one
(91) days after the Scheduled Maturity Date, and (c) does not require payments
of principal prior to the date which is ninety-one (91) days after the Scheduled
Maturity Date of the Term Loan, except pursuant to acceleration.

          "Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, other entity or
government (whether federal, state, county, city, municipal, local, foreign, or
otherwise, including any instrumentality, division, agency, body or department
thereof).

          "Petition Date" has the meaning ascribed to it in the Preamble.

          "Physical Aircraft Appraisal Methodology" means, in determining an
opinion as to the Net Orderly Liquidation Value of Eligible Aircraft or Eligible
Engines, including but not limited to, taking at least the following actions:
(i) reviewing the most recent Collateral Report; (ii) reviewing the Appraiser's
internal value database for values applicable to such Aircraft or Engines; and
(iii) checking other sources, such as manufacturers, other airlines and U.S.
government procurement data, for orderly liquidation prices of such Aircraft or
Engines.

          "Physical Ground Service Equipment Appraisal Methodology" means, in
determining an opinion as to the Net Orderly Liquidation Value of Eligible
Ground Service Equipment, including but not limited to, taking at least the
following actions: (i) reviewing the most recent Collateral Report; (ii)
reviewing the Appraiser's internal value database for values applicable to such
Ground Service Equipment; (iii) checking other sources, such as manufacturers,
other airlines and U.S. government procurement data, for orderly liquidation


                                      A-35



prices of such Ground Service Equipment and (iv) physical inspection of such
Ground Service Equipment.

          "Physical Flight Simulator Appraisal Methodology" means, in
determining an opinion as to the Net Orderly Liquidation Value of Eligible
Flight Simulators, including but not limited to, taking at least the following
actions: (i) reviewing the most recent Collateral Report; (ii) reviewing the
Appraiser's internal value database for values applicable to such Flight
Simulators; (iii) checking other sources, such as manufacturers, other airlines
and U.S. government procurement data, for orderly liquidation prices of such
Flight Simulators and (iv) physical inspection of such Flight Simulators.

          "Physical Spare Parts Appraisal Methodology" means, in determining an
opinion as to the Net Orderly Liquidation Value of Eligible Spare Parts,
including but not limited to, taking at least the following actions: (i)
reviewing the most recent Collateral Report; (ii) reviewing the Appraiser's
internal value database for values applicable to Spare Parts; (iii) developing a
representative sampling of a reasonable number of the different Spare Parts for
which a market check will be conducted; (iv) checking other sources, such as
manufacturers, other airlines, U.S. government procurement data and airline
parts pooling price lists, for orderly liquidation prices of the sample parts
referred to in clause (iii); (v) visiting the Designated Spare Parts Locations
selected by the Appraiser where the Spare Parts are kept by any Credit Party;
(vi) conducting a limited review of the inventory reporting system applicable to
the Spare Parts, including checking information reported in such system against
information determined through physical inspection pursuant to the preceding
clause (v); and (vii) reviewing a sampling of the Spare Parts serviceability
tags, books and records (including tear-down reports). The physical sampling
will be completed at the necessary Designated Spare Parts Locations where in the
aggregate up to 80% (by measure of appraised NOLV) of the Pledged Spare Parts
are kept by the Credit Parties.

          "Physical Tooling Appraisal Methodology" means, in determining an
opinion as to the Net Orderly Liquidation Value of Eligible Tooling, including
but not limited to, taking at least the following actions: (i) reviewing the
most recent Collateral Report; (ii) reviewing the Appraiser's internal value
database for values applicable to such Tooling; (iii) checking other sources,
such as manufacturers, other airlines and U.S. government procurement data, for
orderly liquidation prices of such Tooling and (iv) physical inspection of such
Tooling.

          "Plan" means, at any time, a Pension Plan, ESOP, Multiemployer Plan,
Qualified Plan, Title IV Plan or Retiree Welfare Plan that any Credit Party or
ERISA Affiliate maintains or to which such Credit Party contributes or has an
obligation to contribute.

          "Plan of Reorganization" means a plan of reorganization in the Cases
under chapter 11 of the Bankruptcy Code.

          "Pledged Collateral" means all of the following property now owned or
at anytime acquired by a Credit Party or in which such Credit Party now has or
at any time in the future may acquire any right, title or interest:


                                      A-36



          (o) the Pledged Shares and the certificates representing the Pledged
     Shares, and all dividends, distributions, cash, instruments and other
     property or proceeds from time to time received, receivable or otherwise
     distributed in respect of or in exchange for any or all of the Pledged
     Shares; and

          (p) such portion, as determined by Administrative Agent as provided in
     Section 10.4(j)(v) of this Agreement, of any additional shares of stock of
     a Pledged Entity from time to time acquired by Credit Party in any manner
     (which shares shall be deemed to be part of the Pledged Shares), and the
     certificates representing such additional shares, and all dividends,
     distributions, cash, instruments and other property or proceeds from time
     to time received, receivable or otherwise distributed in respect of or in
     exchange for any or all of such stock; and

          (q) the Pledged Indebtedness and the promissory notes or instruments
     evidencing the Pledged Indebtedness, and all interest, cash, instruments
     and other property and assets from time to time received, receivable or
     otherwise distributed in respect of the Pledged Indebtedness; and

          (r) all additional Indebtedness arising after the date hereof and
     owing to Credit Party and evidenced by promissory notes or other
     instruments, together with such promissory notes and instruments, and all
     interest, cash, instruments and other property and assets from time to time
     received, receivable or otherwise distributed in respect of that
     Indebtedness.

          "Pledged Entity" means an issuer of Pledged Shares or Pledged
Indebtedness.

          "Pledged Indebtedness" means the Indebtedness evidenced by promissory
notes and instruments listed on Part 2 of Disclosure Schedule 10.4 hereto.

          "Pledged Shares" means those shares listed on Part 1 of Disclosure
Schedule 10.4 hereto.

          "Pledged Spare Parts" means Spare Parts which are maintained by or on
behalf of any Credit Party at a Designated Spare Parts Location.

          "Post-Petition Skymiles Facility" means the provisions related to the
Advance Payments (as defined in the Post-Petition Skymiles Facility Documents)
in the Post-Petition Skymiles Facility Documents.

          "Post-Petition Skymiles Facility Documents" means the "SkyMiles
Documents" as defined in the Skymiles Intercreditor Agreement.

          "Prepayment Date" means, with respect to any Net Cash Proceeds from
any Collateral, the earlier of (i) the date occurring 180 days after the date on
which such Net Cash Proceeds were deposited into the Cash Collateral Account
(unless, prior to such date, the applicable Credit Party has (A) acquired any
Replacement Borrowing Base Asset, (B) entered into an agreement for such
acquisition or (C) commenced the construction of the Replacement Borrowing Base
Assets or the repair of the Original Borrowing Base Assets) and (ii) the date
that


                                      A-37



is five (5) Business Days after the date on which Borrower shall have notified
the Administrative Agent of Borrower's determination not to acquire replacement
assets useful in any Credit Party's business (or, in the case of a Property Loss
Event, not to effect repairs).

          "Primary Routes" shall have the meaning ascribed to it in the SGR
Security Agreement.

          "Primary Slots" shall have the meaning ascribed to it in the SGR
Security Agreement.

          "Proceeds" means "proceeds," as such term is defined in the Code,
including (a) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to any Credit Party from time to time with respect to any
asset, (b) any and all payments (in any form whatsoever) made or due and payable
to any Credit Party from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of such
property by any Governmental Authority (or any Person acting under color of
governmental authority), (c) any claim of any Credit Party against third parties
(i) for past, present or future infringement of any Patent or Patent License, or
(ii) for past, present or future infringement or dilution of any Copyright,
Copyright License, Trademark or Trademark License, or for injury to the goodwill
associated with any Trademark or Trademark License, (d) any recoveries by any
Credit Party against third parties with respect to any litigation or dispute
concerning such property including claims arising out of the loss or
nonconformity of, interference with the use of, defects in, or infringement of
rights in, or damage to, such property, (e) all amounts collected on, or
distributed on account of, other property, including dividends, interest,
distributions and Instruments with respect to Investment Property and pledged
Stock, and (f) any and all other amounts, rights to payment or other property
acquired upon the sale, lease, license, exchange or other disposition of such
property and all rights arising out of such property.

          "Projections" means Borrower's forecasted consolidated (a) balance
sheets, (b) profit and loss statements and (c) cash flow statements consistent
with the historical Financial Statements of Borrower (other than adjustments
related to the impact of the Cases), together with appropriate supporting
details and a statement of underlying assumptions.

          "Property Loss Event" means (a) any loss of or damage to property of
any Credit Party that results in the receipt by such Person of proceeds of
insurance in excess of $5,000,000, individually or in the aggregate, (b) any
taking of property of any Credit Party that results in the receipt by such
Person of a compensation payment in respect thereof that exceeds $5,000,000,
individually or in the aggregate, or (c) an "Event of Loss" (as such term is
defined in the Aircraft Mortgage or the Spare Parts Mortgage).

          "Proposed Change" has the meaning ascribed to it in Section 13.2(c).

          "Pro Rata Share" means with respect to all matters relating to any
Lender (a) with respect to the Term Loan A, the percentage obtained by dividing
(i) the Term A Commitment of that Lender by (ii) the aggregate Term A
Commitments of all Lenders, as such percentage may be adjusted by assignments
permitted pursuant to Section 11.1, (b) with respect to the Term Loan B, the
percentage obtained by dividing (i) the Term B Commitment of that Lender by (ii)
the


                                      A-38



aggregate Term B Commitments of all Lenders as such percentage may be adjusted
by assignments permitted pursuant to Section 11.1, (c) with respect to the Term
Loan C, the percentage obtained by dividing (i) the Term C Commitment of that
Lender by (ii) the aggregate Term C Commitments of all Lenders as such
percentage may be adjusted by assignments permitted pursuant to Section 11.1,
(d) with respect to all Loans, the percentage obtained by dividing (i) the
aggregate Commitments of that Lender by (ii) the aggregate Commitments of all
Lenders and, on and after the Maturity Date, the percentage obtained by dividing
(i) the aggregate outstanding principal balance of all Loans held by that Lender
by (ii) the outstanding principal balance of all Loans held by all Lenders, in
each case, as any such percentages may be adjusted by assignments permitted
pursuant to Section 11.1.

          "Purchase Amount" has the meaning ascribed to it in Section 13.2(c).

          "Qualified Plan" means a Pension Plan that is intended to be
tax-qualified under Section 401(a) of the IRC.

          "Real Estate" has the meaning ascribed to it in Section 3.6(b).

          "Regulated Subsidiary" means each of Comair Holdings, LLC and Crown
Rooms, Inc.

          "Reinvestment Deferred Amount" has the meaning ascribed to it in
Section 1.2(c)(ii).

          "Reinvestment Event" means the date on which the Net Cash Proceeds of
(x) any Asset Sale of assets not included in the Term A Borrowing Base or (y)
any Property Loss Event, which in each case are deposited in the Cash Collateral
Account.

          "Reinvestment Notice" means a written notice executed by the Chief
Financial Officer of Borrower stating that no Event of Default has occurred and
is continuing and that Borrower (directly or indirectly through one of the
Guarantors or the applicable Subsidiary) intends and expects to use the
Reinvestment Deferred Amount for Permitted Reinvestment Collateral as specified
therein.

          "Reinvestment Prepayment Date" means, with respect to any Net Cash
Proceeds of any Reinvestment Event, (i) involving any Collateral (other than in
respect of Collateral subject to the Aircraft Mortgage), the earliest of (a) the
date occurring 180 days after such Reinvestment Event, unless, prior to any such
date, Borrower or the applicable Subsidiary has (x) entered into an agreement
for the acquisition of Permitted Reinvestment Collateral or (y) commenced the
construction of Permitted Reinvestment Collateral or the repair of the original
assets constituting Permitted Reinvestment Collateral, (b) the date that is five
(5) Business Days after the date on which Borrower shall have notified the
Administrative Agent of Borrower's determination not to acquire Permitted
Reinvestment Collateral with all or any portion of the relevant Reinvestment
Deferred Amount for such Net Cash Proceeds and (c) the occurrence of any Event
of Default, (ii) arising from a Property Loss Event involving any Aircraft or
Engine, the Loss Payment Date (as defined in the Aircraft Mortgage), or (iii)
arising from a Property Loss Event involving any Engine (not involving the
related Airframe (as defined in the Aircraft


                                      A-39



Mortgage)), the date upon which such Engine is required to be replaced in
accordance with Section 7.05(b) of the Aircraft Mortgage.

          "Reinvestment Release Request" means a written notice executed by the
Chief Financial Officer of Borrower stating that no Event of Default has
occurred and is continuing and that Borrower (directly or indirectly through one
of the Guarantors or the applicable Subsidiary) requests the release of the
Reinvestment Deferred Amount from the Cash Collateral Account for Permitted
Reinvestment Collateral as specified therein.

          "Related Person" means, with respect to any Person, any Affiliates,
officers, employees, agents, directors or other Persons acting for or in concert
with such Person.

          "Relationship Bank" has the meaning ascribed to it in Section (b) of
Annex C.

          "Release" means any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Material in the indoor or outdoor environment, including the movement of
Hazardous Material through or in the air, soil, surface water, ground water or
property.

          "Replacement Aircraft" shall have the meaning ascribed to it in the
Aircraft Mortgage.

          "Replacement Borrowing Base Assets" has the meaning ascribed to it in
Section 1.2(c)(i).

          "Replacement Engine" shall have the meaning ascribed to it in the
Aircraft Mortgage.

          "Replacement Lender" has the meaning ascribed to it in Section
1.14(e).

          "Requirement of Law" means, with respect to any Person, the common law
and all federal, state, local and foreign laws, treaties, rules and regulations,
orders, judgments, decrees and other legal requirements or determinations of any
Governmental Authority or arbitrator, applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.

          "Requisite Lenders" means Lenders having 51% or more of the aggregate
outstanding amount of all Loans.

          "Requisite Term A Lenders" means Lenders having 51% or more of the
aggregate outstanding amount of the Term Loan A.

          "Requisite Term B Lenders" means Lenders having 51% or more of the
aggregate outstanding amount of the Term Loan B.

          "Requisite Term C Lenders" means Lenders having 51% or more of the
aggregate outstanding amount of the Term Loan C.


                                      A-40



          "Reserves" means (a) reserves established by the Administrative Agent
from time to time in its reasonable credit judgment, against Eligible Tooling,
Eligible Aircraft, Eligible Engines, Eligible Real Estate, Eligible Spare Parts,
Eligible Flight Simulators and Eligible Ground Service Equipment, including, but
not limited to, pursuant to Section 5.8, and (b) reserves established by the
Administrative Agent from time to time in its reasonable credit judgment against
Eligible Accounts, Eligible Unbilled Accounts and Eligible Refundable Ticket
Accounts including, but not limited to, a reserve in the amount of Fifty Million
Dollars ($50,000,000) for maintenance of Collateral and liquidation expenses and
for the Carve-Out. Without limiting the generality of the foregoing, Reserves
established to ensure the payment of accrued Interest Expenses or Indebtedness
shall be deemed to be a reasonable exercise of the Administrative Agent's credit
judgment.

          "Restricted Accounts" means (i) the Citibank Cash Collateral Account;
(ii) the accounts identified as Restricted Accounts on Disclosure Schedule 3.19;
and (iii) any deposit account holding cash and cash equivalents subject to Liens
permitted under Section 6.7(j) (except to the extent securing any obligations
under the Post-Petition Skymiles Facility) or Section 6.7(k) or securing surety
bonds permitted under Section 6.3(a)(xiv).

          "Restricted Payment" means, with respect to any Credit Party (a) the
declaration or payment of any dividend or the incurrence of any liability to
make any other payment or distribution of cash or other property or assets in
respect of Stock; (b) any payment on account of the purchase, redemption,
defeasance, sinking fund or other retirement of such Credit Party's Stock or any
other payment or distribution made in respect thereof, either directly or
indirectly; (c) any payment or prepayment of principal of, premium, if any, or
interest, fees or other charges on or with respect to, and any redemption,
purchase, retirement, defeasance, sinking fund or similar payment and any claim
for rescission with respect to, any Permitted Subordinated Indebtedness or the
Post-Petition Skymiles Facility; and (d) any payment made to redeem, purchase,
repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire Stock of such Credit Party now or hereafter
outstanding.

          "Retiree Welfare Plan" means, at any time, a Plan which is an
"employee welfare benefit plan" as described in Section 3(1) of ERISA that
provides for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant's termination of employment,
other than continuation coverage provided pursuant to Section 4980B of the IRC
and at the sole expense of the participant or the beneficiary of the
participant.

          "Routes" has the meaning ascribed to it in the SGR Security Agreement.

          "S&P" means Standard & Poor's Ratings Group.

          "Scheduled Maturity Date" means March 16, 2008.

          "Sell" means, with respect to any property, to sell, convey, transfer,
assign, license, lease or otherwise dispose of, any interest therein or to
permit any Person to acquire any such interest, including, in each case, through
a Sale and Leaseback Transaction or through a sale, factoring at maturity,
collection of or other disposal, with or without recourse, of any notes


                                      A-41



or accounts receivable. Conjugated forms thereof and the noun "Sale" have
correlative meanings.

          "Section 1110 Agreement" means any agreement related to property that
qualifies as "equipment," as such term is used in Section 1110(a)(3) of the
Bankruptcy Code, including, without limitation, security agreements, mortgages,
trusts, leases, conditional sale agreements or other instruments applicable to
such property.

          "Section 1110 Assets" shall mean (a) property that qualifies as
"equipment," as such term is used in Section 1110(a)(3) of the Bankruptcy Code
and all Section 1110 Agreements, to the extent that the Credit Parties are
prohibited from granting liens thereon or assignments thereof under the terms of
any Section 1110 Agreement in effect at the commencement of the Cases (and, to
the extent permitted by this Agreement), as such Section 1110 Agreement may be
amended, modified, refinanced or restructured) under which the applicable
secured party, lessor or seller is entitled to the protections afforded under
Section 1110 of the Bankruptcy Code with respect to such property or agreements,
(b) any other asset with respect to which the granting of any lien would cause a
default, directly or indirectly, of any Section 1110 Agreement, (c) any deposits
and reserves held or maintained pursuant to such agreement or (d) property
referred to in the previous clause that the Borrower or any of the Guarantors
elects to return to the party providing financing therefor in exchange for a
discharge of the related indebtedness; provided, that Section 1110 Assets shall
not include any Proceeds of such property (but only to the extent that the
Credit Parties are entitled to such Proceeds).

          "Secured Obligations" means, in the case of Borrower, the Obligations
and, in the case of any other Credit Party, the obligations of such Credit Party
under the Guaranties and the other Loan Documents to which it is a party.

          "Secured Parties" means the Lenders, the Administrative Agent, any L/C
Issuer and any other holder of any Secured Obligation.

          "Security" means any Stock, voting trust certificate, bond, debenture,
note or other evidence of Indebtedness, whether secured, unsecured, convertible
or subordinated, or any certificate of interest, share or participation in, any
temporary or interim certificate for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing, but shall not
include any evidence of the Obligations.

          "Settlement Date" has the meaning ascribed to it in Section 11.9(a).

          "SGR Cash Collateral Account" means a cash collateral account
maintained at a bank or financial institution acceptable to the Administrative
Agent, subject to a Blocked Account Agreement, into which cash or Cash
Equivalents are deposited pursuant to Section 8.1(l).

          "SGR Security Agreement" means the Slot, Gate and Route Security and
Pledge Agreement from Borrower in favor of the Administrative Agent for the
benefit of the Secured Parties substantially in the form of Exhibit E hereto, as
amended, modified or supplemented from time to time.


                                      A-42


          "Skymiles Agent" has the meaning ascribed to it in the Skymiles
Intercreditor Agreement.

          "Skymiles Collateral" has the meaning ascribed to it in the Skymiles
Intercreditor Agreement.

          "Skymiles Collateral Documents" has the meaning ascribed to it in the
Skymiles Intercreditor Agreement.

          "Skymiles Intercreditor Agreement" means the Intercreditor Agreement
of even date herewith entered into by and among Amex and the Administrative
Agent in form and substance satisfactory to the Arrangers.

          "Slots" has the meaning ascribed to it in the SGR Security Agreement.

          "Slot Utilization" means, with respect to any Slot, (a) a Slot which
is used for a take-off or landing operation; (b) if, by regulation or other
regulatory notice, the FAA considers such Slot as "used" for purposes of the
Slot Utilization Regulations, regardless whether or not such Slot was, in fact,
used (e.g., holidays, labor actions); (c) if, by waiver, the FAA considers such
Slot as "used" for purposes of the Slot Utilization Regulations; or (d) if the
FAA otherwise waives the utilization requirement of the Slot Utilization
Regulations.

          "Slot Utilization Regulations" has the meaning ascribed to it in
Section 5.14(a).

          "Software" shall mean computer programs whether in source code or
object code form, together with all related documentation.

          "Spare Parts" means all of the Spare Parts as defined in the Spare
Parts Mortgage.

          "Spare Parts Mortgage" means the Spare Parts Security Agreement
substantially in the form of Exhibit F entered into by and among the
Administrative Agent for the benefit of the Secured Parties and each Credit
Party that is a signatory thereto, in each case, as amended, modified or
supplemented from time to time.

          "SPC" has the meaning ascribed to it in Section 11.1(e).

          "SPV" means any special purpose funding vehicle identified as such in
a writing by any Lender to the Administrative Agent.

          "Stock" means all shares, options, warrants, general or limited
partnership interests, membership interests or other equivalents (regardless of
how designated) of or in a corporation, partnership, limited liability company
or equivalent entity whether voting or nonvoting, including common stock,
preferred stock or any other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934).

          "Stockholder" means, with respect to any Person, each holder of Stock
of such Person.


                                      A-43



          "Subsidiary" means, with respect to any Person, (a) any domestic
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of more than 50% of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any domestic partnership or limited
liability company in which such Person and/or one or more Subsidiaries of such
Person shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than 50% or of which any such Person is
a general partner or may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of Borrower.

          "Supermajority Term A Lenders" means Lenders having (a) 66-2/3% or
more of the Term A Commitments of all Lenders, or (b) if the Term A Commitments
have been terminated, 66-2/3% or more of the aggregate outstanding amount of the
Term Loan A.

          "Super-Priority Claim" shall mean a claim against any Credit Party in
any of the Cases which is an administrative expense claim having priority over
any or all administrative expenses of the kind specified in sections 503(b) or
507(b) of the Bankruptcy Code.

          "Supporting Route Facilities" has the meaning ascribed to it in the
SGR Security Agreement.

          "Taxes" means taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of the Administrative Agent or a Lender by the
jurisdictions under the laws of which the Administrative Agent and Lenders are
organized or conduct business or any political subdivision thereof.

          "Technology" means, collectively, all designs, formulas, algorithms,
procedures, methods, techniques, ideas, know-how, programs, subroutines, tools,
inventions, creations, improvements, works of authorship, Software, other
similar materials, and all recordings, graphs, drawings, reports, analyses,
other writings, and any other embodiment of the above, in any form whether or
not specifically listed herein, and all related technology, that are used in,
incorporated in, embodied in or displayed by any of the foregoing, or used or
useful in the design, development, reproduction, maintenance or modification of
any of the foregoing.

          "Technology Equipment" means technology assets including mainframe
computers, servers, general computer equipment, printers, monitors, hard drives,
memory, storage devices and call centers/ACD systems but excluding Flight
Simulators, as more fully described in the appraisal with respect thereto
prepared as of July 14, 2004 by American Appraisal Associates.

          "Term A Borrowing Base" means, as of any date of determination by the
Administrative Agent, from time to time, an amount equal to the sum at such time
of:


                                      A-44



          (a)  up to 80% of the book value of the Credit Parties' Eligible
               Accounts as of the date set forth in the most recently delivered
               Borrowing Base Certificate; plus

          (b)  up to 50% of the book value of the Credit Parties' Eligible
               Unbilled Accounts as of the date set forth in the most recently
               delivered Borrowing Base Certificate; plus

          (c)  the lesser of 50% of the book value of the Credit Parties'
               Eligible Refundable Ticket Accounts as of the date set forth in
               the most recently delivered Borrowing Base Certificate and
               $30,000,000; plus

          (d)  the lesser of 50% of the Fair Market Value of Eligible Real
               Estate and $100,000,000, plus

          (e)  the lesser of 50% of the Net Orderly Liquidation Value of
               Eligible Aircraft (other than the Aircraft described in clause
               (f) below) and $250,000,000, plus

          (f)  the lesser of 30% of the Net Orderly Liquidation Value of
               Eligible Aircraft consisting of Comair CRJ-100ERs aircraft and
               $13,500,000; plus

          (g)  the lesser of 40% of the half life Net Orderly Liquidation Value
               of Eligible Engines consisting of the Comair CF34-3A1 engines and
               CF34-3B1 engines and $13,500,000; plus

          (h)  the lesser of 65% of the half life Net Orderly Liquidation Value
               of Eligible Engines consisting of the Comair CF34-8C1 engines and
               $5,100,000; plus

          (i)  the lesser of 50% of the Net Orderly Liquidation Value of
               Eligible Flight Simulators and $25,000,000, plus

          (j)  the lesser of 25% of the Net Orderly Liquidation Value of
               Eligible Spare Parts and $7,000,000, plus

          (k)  the lesser of 25% of the Net Orderly Liquidation Value of
               Eligible Ground Service Equipment and $25,000,000, plus

          (l)  the lesser of 25% of the Net Orderly Liquidation Value of
               Eligible Tooling (excluding Technology Equipment) and
               $25,000,000, plus

          (m)  Cash Collateral Account minus 100% of the aggregate face amount
               of all outstanding Letters of Credit,

in each case, less any Reserves established by the Administrative Agent at such
time and provided, that the availability from the sum of clauses (a), (b) and
(c) above shall not exceed $400,000,000 at any time.


                                      A-45



          "Term A Commitment" means (a) as to any Lender with a Term A
Commitment, the commitment of such Lender to make its Pro Rata Share of the Term
Loan A as set forth on Annex J to the Agreement or in the most recent Assignment
Agreement executed by such Lender, and (b) as to all Lenders with a Term A
Commitment, the aggregate commitment of all Lenders to make the Term Loan A,
which aggregate commitment shall be Six Hundred Million Dollars ($600,000,000)
on the Closing Date. After advancing the Term Loan A, each reference to a
Lender's Term A Commitment shall refer to that Lender's Pro Rata Share of the
outstanding Term Loan A.

          "Term A Lenders" means, as of the date of determination, those Lenders
having Term A Commitments.

          "Term A Termination Date" means the date on which (a) the Term Loan A
has been repaid in full, (b) all other monetary Obligations (other than Excluded
Obligations) arising under the Term Loan A pursuant to the Agreement and the
other Loan Documents have been completely discharged, and (c) the Term A
Commitment shall have expired or irrevocably been terminated under the
Agreement.

          "Term B Commitment" means (a) as to any Lender with a Term B
Commitment, the commitment of such Lender to make its Pro Rata Share of the Term
Loan B as set forth on Annex J to the Agreement or in the most recent Assignment
Agreement executed by such Lender, and (b) as to all Lenders with a Term B
Commitment, the aggregate commitment of all Lenders to make the Term Loan B,
which aggregate commitment shall be Six Hundred Million Dollars ($600,000,000)
on the Closing Date. After advancing the Term Loan B, each reference to a
Lender's Term B Commitment shall refer to that Lender's Pro Rata Share of the
outstanding Term Loan B.

          "Term B Lenders" means, as of the date of determination, those Lenders
having Term B Commitments.

          "Term B Termination Date" means the date on which (a) the Term Loan B
has been repaid in full, (b) all other monetary Obligations (other than Excluded
Obligations) arising under the Term Loan B pursuant to the Agreement and the
other Loan Documents have been completely discharged, and (c) the Term B
Commitment shall have expired or irrevocably been terminated under the
Agreement.

          "Term C Commitment" means (a) as to any Lender with a Term C
Commitment, the commitment of such Lender to make its Pro Rata Share of the Term
Loan C as set forth on Annex J to the Agreement or in the most recent Assignment
Agreement executed by such Lender, and (b) as to all Lenders with a Term C
Commitment, the aggregate commitment of all Lenders to make the Term Loan C,
which aggregate commitment shall be Five Hundred Million Dollars ($500,000,000)
on the Closing Date. After advancing the Term Loan C, each reference to a
Lender's Term C Commitment shall refer to that Lender's Pro Rata Share of the
outstanding Term Loan C.

          "Term C Lenders" means, as of the date of determination, those Lenders
having Term C Commitments.


                                      A-46



          "Term C Termination Date" means the date on which (a) the Term Loan C
has been repaid in full, (b) all other monetary Obligations (other than Excluded
Obligations) arising under the Term Loan C pursuant to the Agreement and the
other Loan Documents have been completely discharged, and (c) the Term C
Commitment shall have expired or irrevocably been terminated under the
Agreement.

          "Term Loan" means the collective reference to the Term Loan A, the
Term Loan B and the Term Loan C.

          "Term Loan A" has the meaning assigned to it in Section 1.1(a).

          "Term Loan B" has the meaning assigned to it in Section 1.1(b).

          "Term Loan C" has the meaning assigned to it in Section 1.1(c).

          "Term Loan Commitment" means each of the Term A Commitments, the Term
B Commitments and the Term C Commitments.

          "Termination Date" means the date on which (a) the Loans have been
repaid in full, (b) all other monetary Obligations (other than Letter of Credit
Obligations and Excluded Obligations) pursuant to the Agreement and the other
Loan Documents have been completely discharged, (c) all Letter of Credit
Obligations have been cash collateralized, cancelled or backed by standby
letters of credit in accordance with this Agreement (including Annex B), and (d)
Borrower shall not have any further right to borrow any monies under the
Agreement.

          "Title 49" means Title 49 of the United States Code, which, among
other things, recodified and replaced the Aviation Act of 1958, as amended, and
the regulations promulgated pursuant thereto or any subsequent legislation that
amends, supplements, or supercedes such provisions.

          "Title IV Plan" means a Pension Plan (other than a Multiemployer
Plan), that is covered by Title IV of ERISA, and that any Credit Party or ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.

          "Tooling" means tooling inventory, including but not limited to dies,
molds, tooling, casting patterns, gauges, jigs, racks and stands for engines,
cowls, radome and wheels, aircraft jacks, test benches, test equipment, lathes,
welders, grinders, presses, punches and hoists and other similar items (whether
or not completed or fixed or handheld).

          "Trademark Security Agreements" means the Trademark Security
Agreements made in favor of Administrative Agent for the benefit of the Secured
Parties by each applicable Credit Party substantially in the form of Exhibit G.

          "Trademark License" means rights under any written agreement now owned
or hereafter acquired by any Credit Party granting any right to use any
Trademark.


                                      A-47



          "Trademarks" means all of the following now owned or hereafter adopted
or acquired by any Credit Party: (a) all trademarks, trade names, corporate
names, business names, trade styles, service marks, logos, other source or
business identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by any
of the foregoing.

          "Two-Month FAA Reporting Period" means the period for which air
carriers provide slot utilization reports to the FAA pursuant to 14 C.F.R.
Section 93.227(i).

          "Unfunded Pension Liability" means, at any time, the aggregate amount,
if any, of the sum of (a) the amount by which the present value of all accrued
benefits under each Title IV Plan exceeds the fair market value of all assets of
such Title IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for each such Title
IV Plan using the actuarial assumptions for funding purposes in effect under
such Title IV Plan, and (b) for a period of five (5) years following a
transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by any
Credit Party or any ERISA Affiliate as a result of such transaction.

          "Uniform Commercial Code jurisdiction" means any jurisdiction that has
adopted all or substantially all of Article 9 as contained in the 2000 Official
Text of the Uniform Commercial Code, as recommended by the National Conference
of Commissioners on Uniform State Laws and the American Law Institute, together
with any subsequent amendments or modifications to the Official Text.

          Rules of construction with respect to accounting terms used in the
Agreement or the other Loan Documents shall be as set forth in Annex G. All
other undefined terms contained in any of the Loan Documents shall, unless the
context indicates otherwise, have the meanings provided for by the Code to the
extent the same are used or defined therein; in the event that any term is
defined differently in different Articles or Divisions of the Code, the
definition contained in Article or Division 9 shall control. Unless otherwise
specified, references in the Agreement or any of the Appendices to a Section,
subsection or clause refer to such Section, subsection or clause as contained in
the Agreement. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to the Agreement as a whole, including all Annexes,
Exhibits and Schedules, as the same may from time to time be amended, restated,
modified or supplemented, and not to any particular section, subsection or
clause contained in the Agreement or any such Annex, Exhibit or Schedule.

          Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation"; the
word "or" is not exclusive; references to Persons include their respective


                                      A-48



successors and assigns (to the extent and only to the extent permitted by the
Loan Documents) or, in the case of governmental Persons, Persons succeeding to
the relevant functions of such Persons; and all references to statutes and
related regulations shall include any amendments of the same and any successor
statutes and regulations. Whenever any provision in any Loan Document refers to
the knowledge (or an analogous phrase) of any Credit Party, such words are
intended to signify that such Credit Party has actual knowledge or awareness of
a particular fact or circumstance or that such Credit Party, if it had exercised
reasonable diligence, would have known or been aware of such fact or
circumstance.


                                      A-49



                          ANNEX B (SECTION 1.1(A)(IV))
                                       TO
                                CREDIT AGREEMENT

                             [Intentionally Omitted]


                                       B-1



                              ANNEX C (SECTION 1.8)
                                       TO
                                CREDIT AGREEMENT

                             [Intentionally Omitted]


                                       C-1



                            ANNEX D (SECTION 2.1(F))
                                       TO
                                CREDIT AGREEMENT

                             [Intentionally Omitted]


                                       D-1



                            ANNEX E (SECTION 4.1(A))
                                       TO
                                CREDIT AGREEMENT

                             [Intentionally Omitted]


                                       E-1



                            ANNEX F (SECTION 4.1(B))
                                       TO
                                CREDIT AGREEMENT

                             [Intentionally Omitted]


                                       F-1



                             ANNEX G (SECTION 6.10)
                                       TO
                                CREDIT AGREEMENT

                               FINANCIAL COVENANTS

          Borrower shall not breach or fail to comply with any of the following
financial covenants, each of which shall be calculated in accordance with GAAP
consistently applied:

     (a) Maximum Net Capital Expenditures. Borrower and its Subsidiaries on a
consolidated basis shall not make Net Capital Expenditures during the any Fiscal
Quarter that exceed in the aggregate the amounts set forth opposite each such
Fiscal Quarter below:



      Fiscal Quarter        Net Capital Expenditures
      --------------        ------------------------
                                  (in millions)
                         
October - December   2005              145
January - March      2006              131
April - June         2006              138
July - September     2006              108
October - December   2006              121
January - March      2007              152
April - June         2007              132
July - September     2007              108
October - December   2007              106
January - March      2008              106


; provided, however, that the amount of Net Capital Expenditures referenced
above will be increased in any period by the positive amount (if any), equal to
the difference obtained by taking the Net Capital Expenditures limits specified
above for all prior periods minus the actual amount of any Net Capital
Expenditures expended during all such prior periods (the "Carry Over Amount").

     (b) Minimum EBITDAR. At the end of each Fiscal Month set forth below, the
amount equal to the sum of (i) EBITDAR for the 12-month period then ended of
Borrower and its Subsidiaries on a consolidated basis plus (ii) the lesser of
(A) 100% of the Excess Aggregate Cash On Hand as of such date and (B)
$250,000,000 shall not be less than the amount set forth below opposite such
Fiscal Month (the "Required EBITDAR").


                                       G-1





  Fiscal Month        EBITDAR
  ------------        -------
                   (in millions)
                
October     2005         571
November    2005         628
December    2005         644
January     2006         672
February    2006         681
March       2006         704
April       2006         745
May         2006         779
June        2006         830
July        2006         907
August      2006       1,015
September   2006       1,104
October     2006       1,210
November    2006       1,290
December    2006       1,372
January     2007       1,560
February    2007       1,625
March       2007       1,691
April       2007       1,731
May         2007       1,769
June        2007       1,806
July        2007       1,843
August      2007       1,875
September   2007       1,903
October     2007       1,935
November    2007       1,963
December    2007       1,988
January     2008       2,000
February    2008       2,000
March       2008       2,000


     (c) Aggregate Cash On Hand. The Delta Companies shall maintain Aggregate
Cash On Hand of at least:

          (i) at all times from the Closing Date through May 31, 2006,
     $750,000,000;

          (ii) at all times from June 1, 2006 through November 30, 2006,
     $1,000,000,000;

          (iii) at all times from December 1, 2006 through February 28, 2007,
     $750,000,000; and

          (iv) at all times thereafter until the Termination Date,
     $1,000,000,000.


                                      G-2



          If on any date of determination of Aggregate Cash On Hand, any Delta
Company has contractually agreed (i) to post cash collateral for the benefit of
any third party or (ii) that payments otherwise owing to it by a third party
shall be subject to a holdback, in each case in an amount exceeding
$125,000,000, such amount shall not be included in any calculation of Aggregate
Cash On Hand on such date of determination to the extent such obligation to post
cash collateral or such holdback will become effective within ninety (90) days
of such date of determination; provided, that in no event shall any
determination of Aggregate Cash On Hand exclude the amount of cash collateral or
any holdback to be provided (x) in connection with any aircraft or equipment
financing or lease or (y) pursuant to any other agreement with GE Capital or any
of its affiliates until, in each case, actually so provided.

                    Unless otherwise specifically provided herein, any
accounting term used in the Agreement shall have the meaning customarily given
such term in accordance with GAAP, and all financial computations hereunder
shall be computed in accordance with GAAP consistently applied. That certain
items or computations are explicitly modified by the phrase "in accordance with
GAAP" shall in no way be construed to limit the foregoing. If any "Accounting
Changes" (as defined below) occur and such changes result in a change in the
calculation of the financial covenants, standards or terms used in the Agreement
or any other Loan Document, then Borrower, Administrative Agent and Lenders
agree to enter into negotiations in order to amend such provisions of the
Agreement so as to equitably reflect such Accounting Changes with the desired
result that the criteria for evaluating Borrower's and its Subsidiaries'
financial condition shall be the same after such Accounting Changes as if such
Accounting Changes had not been made; provided, however, that the agreement of
Requisite Lenders to any required amendments of such provisions shall be
sufficient to bind all Lenders. "Accounting Changes" means (i) changes in
accounting principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants (or successor thereto or any
agency with similar functions), (ii) changes in accounting principles concurred
in by Borrower's certified public accountants; (iii) purchase accounting
adjustments under A.P.B. 16 or 17 and EITF 88-16, and the application of the
accounting principles set forth in FASB 109, including the establishment of
reserves pursuant thereto and any subsequent reversal (in whole or in part) of
such reserves; and (iv) the reversal of any reserves established as a result of
purchase accounting adjustments. All such adjustments resulting from
expenditures made subsequent to the Closing Date (including capitalization of
costs and expenses or payment of pre-Closing Date liabilities) shall be treated
as expenses in the period the expenditures are made and deducted as part of the
calculation of EBITDAR in such period. If Administrative Agent, Borrower and
Requisite Lenders agree upon the required amendments, then after appropriate
amendments have been executed and the underlying Accounting Change with respect
thereto has been implemented, any reference to GAAP contained in the Agreement
or in any other Loan Document shall, only to the extent of such Accounting
Change, refer to GAAP, consistently applied after giving effect to the
implementation of such Accounting Change. If Administrative Agent, Borrower and
Requisite Lenders cannot agree upon the required amendments within thirty (30)
days following the date of implementation of any Accounting Change, then all
Financial Statements delivered and all calculations of financial covenants and
other standards and terms in accordance with the Agreement and the other Loan
Documents shall be prepared, delivered and made without regard to the underlying
Accounting Change. For purposes of Section 8.1, a breach of a Financial Covenant
contained in this Annex G shall be deemed to have


                                      G-3



occurred as of any date of determination by Administrative Agent or as of the
last day of any specified measurement period, regardless of when the Financial
Statements reflecting such breach are delivered to Administrative Agent.


                                      G-4



                            ANNEX H (SECTION 1.1(D))
                                       TO
                                CREDIT AGREEMENT

                             [Intentionally Omitted]


                                       H-1



                             ANNEX I (SECTION 13.10)
                                       TO
                                CREDIT AGREEMENT

                             [Intentionally Omitted]


                                       I-1



                 ANNEX J (FROM ANNEX A - COMMITMENTS DEFINITION)
                                       TO
                                CREDIT AGREEMENT

                             [Intentionally Omitted]


                                       J-1



            ANNEX K (FROM ANNEX A - PERMITTED INVESTMENTS DEFINITION)
                                       TO
                                CREDIT AGREEMENT

                             [Intentionally Omitted]


                                       J-1



                             ANNEX L (SECTION 5.21)
                                       TO
                                CREDIT AGREEMENT

                             POST-CLOSING CONDITIONS

          In addition to, and not in limitation of, the conditions described in
Section 2.1 of the Agreement, pursuant to Section 5.21, the following items must
be received by the Administrative Agent in form and substance reasonably
satisfactory to the Administrative Agent (it being understood that any document
delivered substantially in the form of the applicable Exhibit hereto shall be
deemed to be in form and substance satisfactory to the Administrative Agent) or
waived in writing by the Administrative Agent within thirty (30) days after the
Closing Date (each capitalized term used but not otherwise defined herein shall
have the meaning ascribed thereto in Annex A to the Agreement):

     1.   Security Interests; Filings; Lien Search Results. (a) Evidence
          reasonably satisfactory to the Administrative Agent that (for the
          benefit of Secured Parties) has a valid and perfected first priority
          security interest in the Collateral (or, if applicable, subject to the
          relative priorities set forth in the Collateral Documents), and that
          all documents and instruments (including financing statements under
          the Code) required by law or reasonably requested by the
          Administrative Agent to be filed, registered or recorded in order to
          perfect Secured Parties' security interests in the Collateral shall
          have been filed, registered or recorded, or shall have been delivered
          to the Administrative Agent for filing, registration or recording and
          (b) the results of a recent Lien, tax and judgment search in each
          relevant jurisdiction, including the FAA registry, with respect to the
          Credit Parties, revealing no Liens on any of the assets of the Credit
          Parties, other than Liens permitted hereby and other Liens acceptable
          to the Administrative Agent.

     2.   Control Letters. Control Letters from (a) all issuers of
          uncertificated securities and financial assets held by Borrower, (b)
          all securities intermediaries with respect to all securities accounts
          and securities entitlements of Borrower, and (c) all futures
          commission agents and clearing houses with respect to all commodities
          contracts and commodities accounts held by Borrower, in each case to
          the extent required by the Loan Documents.

     3.   Intellectual Property Security Agreements. Duly executed originals of
          Trademark Security Agreements, Copyright Security Agreements and
          Patent Security Agreements, each signed by each Credit Party which
          owns U.S. registered Trademarks, Copyrights and/or Patents, as
          applicable, all in form and substance reasonably satisfactory to the
          Administrative Agent, together with all instruments, documents and
          agreements executed pursuant thereto.

     4.   Cash Management System; Blocked Account Agreements. Evidence
          satisfactory to Administrative Agent that Cash Management Systems
          complying with Annex C to the Agreement have been established and are
          being maintained in the manner set forth in such Annex C, together
          with copies of duly executed tri-


                                       L-1



          party blocked account and lock box agreements, all as required by
          Annex C (it being understood that agreements in substantially the same
          form as the Blocked Account Agreements entered into pursuant to the
          Existing Credit Agreement shall be deemed to be in form and substance
          satisfactory to the Administrative Agent).

     5.   Opinions of Counsel. Duly executed originals of opinions of (a) Davis
          Polk & Wardwell, counsel for the Credit Parties and (b) with respect
          to the laws of the State of Georgia, In-House Counsel for the Credit
          Parties, (c) Daugherty, Fowler, Peregrin & Haught, FAA Counsel, (c)
          with respect to the laws of the State of Florida, counsel to the
          Credit Parties reasonably acceptable to the Administrative Agent and
          its counsel, (d) with respect to the laws of the State of Ohio,
          counsel to the Credit Parties reasonably acceptable to the
          Administrative Agent and its counsel, (d) with respect to the laws of
          the Commonwealth of Kentucky, counsel to the Credit Parties reasonably
          acceptable to the Administrative Agent and its counsel, and (e) any
          special, local, regulatory and in-house counsel opinions reasonably
          requested by the Administrative Agent, each in form and substance
          reasonably satisfactory to the Administrative Agent and its counsel
          and each such opinion to include an express statement to the effect
          that the Administrative Agent and Lenders are authorized to rely on
          such opinion.

     6.   Mortgages. Mortgages covering all of the Owned Real Estate (the
          "Mortgaged Properties") together with: (a) evidence that counterparts
          of the Mortgages have been recorded or arrangements reasonably
          satisfactory to the Administrative Agent have been made to record in
          all places to the extent necessary or desirable, in the judgment of
          the Administrative Agent, to create a valid, perfected and enforceable
          first priority lien (subject only to Permitted Encumbrances) on each
          Mortgaged Property in favor of the Administrative Agent for the
          benefit of itself and Term Lenders and (b) an opinion of counsel in
          each state in which any Mortgaged Property is located in form and
          substance and from counsel reasonably satisfactory to the
          Administrative Agent.

     7.   Intercompany Loan Subordination Agreement. Duly executed originals of
          the Intercompany Loan Subordination Agreement, and all instruments,
          documents and agreements executed pursuant thereto.

     8.   FAA Releases. Execution and filing of FAA releases with respect to the
          following: (a) Senior Aircraft Mortgage, (b) Junior Aircraft Mortgage,
          (c) Senior Spare Parts Security Agreement and (d) Junior Spare Parts
          Security Agreement.

     9.   SGR Security Agreement Schedule. Delivery of revised Schedule 5(e) to
          the SGR Security Agreement.

     10.  Payoff Letters/Termination. Payoff letter and termination of the
          Existing Credit Agreement and related security and the Existing
          Skymiles Facility and related security.


                                      L-2

EX-10.2

                                                                    EXHIBIT 10.2

                                                               EXECUTION VERSION

                                 AMENDMENT NO 1
         TO SECURED SUPER-PRIORITY DEBTOR IN POSSESSION CREDIT AGREEMENT

          AMENDMENT NO.1 (this "Amendment"), dated as of October 7, 2005, to the
SECURED SUPER-PRIORITY DEBTOR IN POSSESSION CREDIT AGREEMENT, dated as of
September 16, 2005 (as amended, supplemented, restated or otherwise modified
from time to time, the "Credit Agreement"), among DELTA AIR LINES, INC., as a
debtor and debtor in possession (the "Borrower"), the other Credit Parties
signatory thereto, each as a debtor and debtor in possession, the Lenders party
thereto from time to time and GENERAL ELECTRIC CAPITAL CORPORATION, as agent for
the Lenders and the Secured Parties (in such capacity, together with its
successors in such capacity, the "Administrative Agent"). Unless otherwise
specified herein, all capitalized terms used in this Amendment shall have the
meanings ascribed to such terms in the Credit Agreement.

                                   WITNESSETH:

          WHEREAS, the Borrower has requested certain amendments to the Credit
Agreement as herein set forth; and

          WHEREAS, the Borrower, the Administrative Agent and the Lenders
signatory to an Acknowledgement and Consent (as defined below) have agreed to
amend the Credit Agreement on the terms and subject to the conditions herein
provided; and

          NOW, THEREFORE, in consideration of the premises and the covenants and
obligations contained herein the parties hereto agree as follows:

     SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT

          As of the Effective Date (as defined below), the Credit Agreement is
hereby amended as follows:

          (a) by deleting all references to "$1,700,000,000" in the Credit
Agreement and inserting in lieu thereof "$1,900,000,000";

          (b) by deleting the first sentence of Section 1.1(b)(i) (Term Loan B)
and inserting in lieu thereof the following sentence:

          "Subject to the terms and conditions hereof, each Term B Lender agrees
to make a term loan (collectively, the "Term Loan B") to Borrower in an
aggregate principal amount equal to (A) on the Closing Date, its Term B
Commitment in effect as of the Closing Date as set forth on Annex J and (B) on
the Entry Date, the remainder, if any, of its Term B Commitment in effect as of
the Entry Date as set forth on Annex J."

          (c) by deleting the first sentence of Section 1.1(c)(i) (Term Loan C)
and inserting in lieu thereof the following sentence:

          "Subject to the terms and conditions hereof, each Term C Lender agrees
to make a term loan (collectively, the "Term Loan C") to Borrower in an
aggregate principal amount equal to (A) on the Closing Date, its Term C
Commitment in effect as of the Closing Date as set forth



on Annex J and (B) on the Entry Date, the remainder, if any, of its Term C
Commitment in effect as of the Entry Date as set forth on Annex J."

          (d) by deleting the table in Section 1.5 (Interest and Applicable
Margins) in its entirety and inserting in lieu thereof the following table:

                                           
          Applicable Term A Index Margin...   3.75%
          Applicable Term A LIBOR Margin...   4.50%
          Applicable Term B Index Margin...   5.75%
          Applicable Term B LIBOR Margin...   6.50%
          Applicable Term C Index Margin...   8.25%
          Applicable Term C LIBOR Margin...   9.00%



          (e) by inserting before the period at the end of Section 1.5(e) the
following clause:

          ", except with the consent of the Administrative Agent in its sole
discretion"

          (f) by deleting the lead-in paragraph of Section 2.2 (Conditions to
Subsequent Loans) and inserting in lieu thereof the following paragraph:

          "No Lender shall be obligated to make the remaining Term Loan
requested to be made by it after the Closing Date pursuant to Section 1.1 unless
each of the following conditions precedent is satisfied or provided for in a
manner reasonably satisfactory to the Administrative Agent, or duly waived in
writing in accordance with Section 13.2:"

          (g) by deleting the reference in Section 2.2(g) to "Post Petition
Skymiles Facility Documents" and inserting in lieu thereof "Skymiles Agreements
(as defined in the Skymiles Intercreditor Agreement)";

          (h) by deleting the phrase "'Obligations' (as defined in the
Post-Petition Skymiles Facility Documents)" in Section 6.13(g) (Restricted
Payments) and inserting in lieu thereof the following words:

          " 'Obligations' (as defined in the Post-Petition Skymiles Facility
Documents) arising in connection with the Bankruptcy Loans (as defined in the
Post-Petition Skymiles Facility Documents)"

          (i) by deleting the last sentence in Section 6.14 (Change of Corporate
Location; Change of Fiscal Year) and inserting in lieu thereof the following
sentence:

          "No Credit Party shall change its Fiscal Year."

          (j) by deleting the definition of "Entry Date" in Annex A
(Definitions) in its entirety and inserting in lieu thereof the following
definition:


                                       -2-



          "Entry Date" means the first date after the entry of the Final Order
on which each of the conditions precedent set forth in Section 2.2 and Amendment
No. 1 to this Agreement is satisfied or provided for in a manner reasonably
satisfactory to the Administrative Agent, or duly waived in writing in
accordance with Section 13.2."

          (k) by deleting the definition of "Term B Commitment" in Annex A
(Definitions) in its entirety and inserting in lieu thereof the following
definition:

          "Term B Commitment" means (a) as to any Lender with a Term B
Commitment, the commitment of such Lender to make its Pro Rata Share of the Term
Loan B as set forth on Annex J to the Agreement or in the most recent Assignment
Agreement executed by such Lender, and (b) as to all Lenders with a Term B
Commitment, the aggregate commitment of all Lenders to make the Term Loan B,
which aggregate commitment shall be Six Hundred Million Dollars ($600,000,000)
on the Closing Date and Seven Hundred Million Dollars ($700,000,000) on the
Entry Date. After advancing the aggregate amount of the Term B Commitment, each
reference to a Lender's Term B Commitment shall refer to that Lender's Pro Rata
Share of the outstanding Term Loan B."

          (l) by deleting the definition of "Term C Commitment" in Annex A
(Definitions) in its entirety and inserting in lieu thereof the following
definition:

          "Term C Commitment" means (a) as to any Lender with a Term C
Commitment, the commitment of such Lender to make its Pro Rata Share of the Term
Loan C as set forth on Annex J to the Agreement or in the most recent Assignment
Agreement executed by such Lender, and (b) as to all Lenders with a Term C
Commitment, the aggregate commitment of all Lenders to make the Term Loan C,
which aggregate commitment shall be Five Hundred Million Dollars ($500,000,000)
on the Closing Date and Six Hundred Million Dollars ($600,000,000) on the Entry
Date. After advancing the aggregate amount of the Term C Commitment, each
reference to a Lender's Term C Commitment shall refer to that Lender's Pro Rata
Share of the outstanding Term Loan C."

          (m) by deleting Annex J in its entirety and inserting in lieu thereof
Exhibit I attached hereto.

          (n) by inserting at the end of Annex L the following new paragraph:

          "11. Post-Petition Skymiles Facility Documents. To the extent not
delivered to the Administrative Agent prior to the Entry Date, each
Post-Petition Skymiles Facility Document in form and substance reasonably
satisfactory to the Administrative Agent."

          (o) by deleting Disclosure Schedule 3.19 in its entirety and inserting
in lieu thereof Exhibit II attached hereto;

          (p) by inserting the following footnote to Disclosure Schedule 6.7:

          "1 The listing of any Lien on this Disclosure Schedule 6.7 does not
concede the amount, perfection or priority of such Lien."

          (q) by deleting Part F of Disclosure Schedule 6.7 in its entirety and
inserting in lieu thereof Exhibit III attached hereto;


                                       -3-



     SECTION 2. CONSENT AND WAIVER. As of the Effective Date, the Lenders hereby
waive compliance with the covenant contained in Section 6.13 (Restricted
Payments) of the Credit Agreement solely to permit the prepayment of the
Post-Petition Skymiles Facility in the aggregate principal amount of $50,000,000
from the proceeds of the additional Term Loan advanced by the Lenders pursuant
to the Credit Agreement, as amended by this Amendment.

     SECTION 3. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS AMENDMENT.

          This Amendment shall become effective as of the date (the "Effective
Date") on which each of the following conditions shall have been satisfied or
duly waived:

          (a) Certain Documents. The Administrative Agent shall have received
each of the following, each in form and substance satisfactory to the
Administrative Agent:

               (i) this Amendment, duly executed by each of the Credit Parties
and the Administrative Agent;

               (ii) written consents to this Amendment (each an "Acknowledgement
and Consent"), duly executed by Lenders (including General Electric Capital
Corporation and Morgan Stanley Senior Funding, Inc.) constituting the percentage
of applicable Lenders required under Section 13.2 (Amendments and Waivers) of
the Credit Agreement;

               (iii) amendment to the Skymiles Intercreditor Agreement, duly
executed by Amex and the Administrative Agent;

               (iv) amendment to the Skymiles Modification (as defined in the
Skymiles Intercreditor Agreement), duly executed by Amex, Delta Loyalty
Management Services, LLC and the Borrower;

               (v) such additional documentation as the Administrative Agent may
reasonably require; and

               (vi) the Bankruptcy Court shall have entered the Final Order,
certified by the Clerk of the Bankruptcy Court as having been duly entered, and
the Final Order shall be in full force and effect and shall not have been
vacated, reversed, modified, amended or stayed without the prior written consent
of the Administrative Agent, the Arrangers and the Requisite Lenders.

          (b) Payment of Fees and Expenses. The Administrative Agent shall have
received all fees and expenses of the Administrative Agent and the Lenders due
and payable as of the date hereof by the Borrower pursuant to Section 4 below or
the Loan Documents, including, without limitation, all costs, fees and expenses
of the Administrative Agent and Lenders in connection with the preparation,
execution and delivery of this Amendment, including the reasonable fees and
out-of-pocket expenses of counsel for the Administrative Agent with respect
thereto.

          (c) Representations and Warranties. Each of the representations and
warranties contained in Section 5 below shall be true and correct in all
respects.


                                       -4-



     SECTION 4. FEES AND EXPENSES.

          (a) As consideration for the execution of this Amendment, the Borrower
agrees to pay to the Administrative Agent for the account of each Arranger and
the Lenders the fees set forth in the Amendment No. 1 Fee Letter, dated as of
the date hereof, among the Borrower and the Arrangers.

          (b) As provided in Section 13.3 (Fees and Expenses) of the Credit
Agreement, the Borrower agrees to reimburse the Administrative Agent for all
reasonable fees, costs and expenses in connection with the preparation,
execution and delivery of this Amendment.

     SECTION 5. REPRESENTATIONS AND WARRANTIES. Each Credit Party hereby jointly
and severally represents and warrants to the Administrative Agent and each
Lender, with respect to all Credit Parties, as follows:

          (a) After giving effect to this Amendment, each of the representations
and warranties in the Credit Agreement and in the other Loan Documents are true
and correct in all material respects on and as of the date hereof as though made
on and as of such date, except to the extent that any such representation or
warranty expressly relates to an earlier date and except for changes therein
expressly permitted by the Credit Agreement.

          (b) Subject to entry by the Bankruptcy Court of the Final Order, the
execution, delivery and performance by each Credit Party of this Amendment have
been duly authorized by all requisite corporate, limited liability company or
limited partnership action on the part of such Credit Party and will not violate
any of the articles of incorporation or bylaws (or other constituent documents)
of such Credit Party.

          (c) This Amendment has been duly executed and delivered by each Credit
Party, and, upon entry by the Bankruptcy Court of the Final Order, each of this
Amendment and the Credit Agreement as amended hereby constitutes the legal,
valid and binding obligation of such Credit Party, enforceable against such
Credit Party in accordance with their terms.

          (d) After giving effect to this Amendment, no Default or Event of
Default has occurred and is continuing as of the date hereof.

     SECTION 6. REFERENCE TO AND EFFECT ON LOAN DOCUMENTS.

          (a) As of the Effective Date, each reference in the Credit Agreement
to "this Agreement," "hereunder," "hereof," "herein" or words of like import
shall mean and be a reference to the Credit Agreement as amended hereby and
references in any other Loan Document to the "Credit Agreement," "thereunder,"
"thereof," "therein," or words of like import shall mean and be a reference to
the Credit Agreement as amended hereby.

          (b) Except to the extent amended hereby, the Credit Agreement and all
of the other Loan Documents shall remain in full force and effect and are hereby
ratified and confirmed.

          (c) The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any Default or Event of Default or any right, power,
privilege or remedy of


                                       -5-



the Administrative Agent, any Lender or any L/C Issuer under the Credit
Agreement or any Loan Document, or constitute a waiver of any provision of the
Credit Agreement or any Loan Document, except as and to the extent expressly set
forth herein.

          (d) The Credit Parties hereby confirm that the security interests and
liens granted pursuant to the Loan Documents continue to secure the Obligations
as set forth in the Loan Documents and that such security interests and liens
remain in full force and effect.

     SECTION 7. GOVERNING LAW. This Amendment and the rights and obligations of
the parties hereto shall be governed by, and construed and interpreted in
accordance with, the law of the State of New York.

     SECTION 8. HEADINGS. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purposes.

     SECTION 9. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same instrument. Receipt by the
Administrative Agents of a facsimile copy of an executed signature page hereof
shall constitute receipt by the Administrative Agents of an executed counterpart
of this Amendment.

                            [SIGNATURE PAGES FOLLOW]


                                       -6-



          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers, general partners or managing members
thereunto duly authorized, as of the date first written above.

                                        DELTA AIR LINES, INC., as Borrower


                                        By: /s/ Paul A. Jacobson
                                            ------------------------------------
                                        Name: Paul A. Jacobson
                                        Title: Vice President and Treasurer


                                        GENERAL ELECTRIC CAPITAL CORPORATION, as
                                        Administrative Agent and Lender


                                        By: /s/ Douglas A. Kelly
                                            ------------------------------------
                                        Name: Douglas A. Kelly
                                        Title: Duly Authorized Signatory


                                        MORGAN STANLEY SENIOR FUNDING, INC.,
                                        as Lender


                                        By: /s/ Jason Colodne
                                            ------------------------------------
                                        Name: Jason Colodne
                                        Title: Authorized Signatory

The following persons are signatories to this Agreement in their capacity as
Credit Parties and not as Borrower.

                                        ASA HOLDINGS, INC.


                                        By: /s/ Kenneth W. Morge
                                            ------------------------------------
                                        Name: Kenneth W. Morge
                                        Title: Vice President


                                        COMAIR HOLDINGS, LLC


                                        By: /s/ Donald T. Bornhorst
                                            ------------------------------------
                                        Name: Donald T. Bornhorst
                                        Title: Treasurer

                  AMENDMENT NO. 1 TO DELTA DIP CREDIT AGREEMENT



                                        COMAIR, INC.


                                        By: /s/ Donald T. Bornhorst
                                            ------------------------------------
                                        Name: Donald T. Bornhorst
                                        Title: Chief Financial Officer


                                        COMAIR SERVICES, INC.


                                        By: /s/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Treasurer


                                        CROWN ROOMS, INC.


                                        By: /s/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Assistant Treasurer


                                        DAL AIRCRAFT TRADING, INC.


                                        By: /s/ Kenneth W. Morge
                                            ------------------------------------
                                        Name: Kenneth W. Morge
                                        Title: Assistant Treasurer


                                        DAL GLOBAL SERVICES, LLC


                                        By: /s/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Assistant Treasurer


                                        DAL MOSCOW, INC.


                                        By: /s/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Treasurer

                  AMENDMENT NO. 1 TO DELTA DIP CREDIT AGREEMENT



                                        DELTA AIRELITE BUSINESS JETS, INC.


                                        By: /s/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Assistant Treasurer


                                        DELTA BENEFITS MANAGEMENT, INC.


                                        By: /s/ Michael O. Randolfi
                                            ------------------------------------
                                        Name: Michael O. Randolfi
                                        Title: Treasurer


                                        DELTA CONNECTION ACADEMY, INC.


                                        By: /s/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Treasurer


                                        DELTA CORPORATE IDENTITY, INC.


                                        By: /s/ Mona Warwar
                                            ------------------------------------
                                        Name: Mona Warwar
                                        Title: Assistant Treasurer


                                        DELTA LOYALTY MANAGEMENT SERVICES, LLC


                                        By: /s/ Michael O. Randolfi
                                            ------------------------------------
                                        Name: Michael O. Randolfi
                                        Title: Treasurer


                                        DELTA TECHNOLOGY, LLC


                                        By: /s/ E. Alan Arnold
                                            ------------------------------------
                                        Name: E. Alan Arnold
                                        Title: Secretary

                  AMENDMENT NO. 1 TO DELTA DIP CREDIT AGREEMENT



                                        DELTA VENTURES III, LLC


                                        By: /s/ Michael O. Randolfi
                                            ------------------------------------
                                        Name: Michael O. Randolfi
                                        Title: Treasurer


                                        EPSILON TRADING, INC.


                                        By: /s/ Michael O. Randolfi
                                            ------------------------------------
                                        Name: Michael O. Randolfi
                                        Title: Assistant Treasurer


                                        KAPPA CAPITAL MANAGEMENT, INC.


                                        By: /s/ Michael O. Randolfi
                                            ------------------------------------
                                        Name: Michael O. Randolfi
                                        Title: President


                                        SONG, LLC


                                        By: /s/ Kenneth W. Morge
                                            ------------------------------------
                                        Name: Kenneth W. Morge
                                        Title: Assistant Treasurer

                  AMENDMENT NO. 1 TO DELTA DIP CREDIT AGREEMENT



                 ANNEX J (FROM ANNEX A - COMMITMENTS DEFINITION)
                                       TO
                                CREDIT AGREEMENT

                             [Intentionally Omitted]

                          EXHIBIT I TO AMENDMENT NO. 1



                             [Intentionally Omitted]

                          EXHIBIT II TO AMENDMENT NO. 1



                             [Intentionally Omitted]

                         EXHIBIT III TO AMENDMENT NO. 1

EX-15

Exhibit 15

[Letterhead of Deloitte & Touche LLP, Atlanta, Georgia]

November 10, 2005

Delta Air Lines, Inc.
Atlanta, Georgia

We have made a review, in accordance with the standards of the Public Company Accounting Oversight Board (United States), of the unaudited interim financial information of Delta Air Lines, Inc. and subsidiaries for the periods ended September 30, 2005 and 2004, as indicated in our report dated November 10, 2005 (which report includes explanatory paragraphs relating to the Company’s filing a petition for reorganization under Chapter 11 of the United States Bankruptcy Code and its ability to continue as a going concern); because we did not perform an audit, we expressed no opinion on that information.

We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, is incorporated by reference in Registration Statement No. 333-123629 on Form S-3, Post-Effective Amendment No. 2 to Registration Statement No. 333-115206 on Form S-3, Post-Effective Amendment No. 1 on Form S-3 to Registration Statement No. 333-121473 on
Form S-1 and Registration Statements No. 333-16471, 333-46904, 333-48718, 333-49553, 333-73856, 333-121482, 333-122714 and 333-128116 on Form S-8.

We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statements prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.

/s/ Deloitte & Touche LLP

EX-31.1

Exhibit 31.1

I, Gerald Grinstein, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Delta Air Lines, Inc. for the quarterly period ended September 30, 2005;

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Delta as of, and for, the periods presented in this report;

     4. Delta’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-l5(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Delta and have:

          (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to Delta, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

          (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

          (c) Evaluated the effectiveness of Delta’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

          (d) Disclosed in this report any change in Delta’s internal control over financial reporting that occurred during Delta’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Delta’s internal control over financial reporting; and

     5. Delta’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Delta’s auditors and the Audit Committee of Delta’s Board of Directors (or persons performing the equivalent functions):

          (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Delta’s ability to record, process, summarize and report financial information; and

          (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in Delta’s internal control over financial reporting.

Date: November 10, 2005
	/s/ Gerald Grinstein
	Gerald Grinstein
	Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Edward H. Bastian, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Delta Air Lines, Inc. for the quarterly period ended September 30, 2005;

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Delta as of, and for, the periods presented in this report;

     4. Delta’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-l 5(f) and 15d-15(f)) for Delta and have:

          (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to Delta, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

          (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

          (c) Evaluated the effectiveness of Delta’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

          (d) Disclosed in this report any change in Delta’s internal control over financial reporting that occurred during Delta’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Delta’s internal control over financial reporting; and

     5. Delta’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Delta’s auditors and the Audit Committee of Delta’s Board of Directors (or persons performing the equivalent functions):

          (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Delta’s ability to record, process, summarize and report financial information; and

          (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in Delta’s internal control over financial reporting.

Date: November 10, 2005
	/s/ Edward H. Bastian
	Edward H. Bastian
	Executive Vice President and Chief Financial Officer

EX-32

Exhibit 32

November 10, 2005

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Ladies and Gentlemen:

     The certifications set forth below are hereby submitted to the Securities and Exchange Commission pursuant to, and solely for the purpose of complying with, Section 1350 of Chapter 63 of Title 18 of the United States Code in connection with the filing on the date hereof with the Securities and Exchange Commission of the Quarterly Report on Form 10-Q of Delta Air Lines, Inc. (“Delta”) for the quarterly period ended September 30, 2005 (the “Report”).

     Each of the undersigned, the Chief Executive Officer and the Executive Vice President and Chief Financial Officer, respectively, of Delta, hereby certifies that, as of the end of the period covered by the Report:

1.	such Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Delta.

/s/ Gerald Grinstein

Name: Gerald Grinstein

Chief Executive Officer

/s/ Edward H. Bastian

Name: Edward H. Bastian

Executive Vice President and

Chief Financial Officer