American Airlines has filed plans with the Securities and Exchange Commission to issue $592.5 million of equipment trust certificates that will be secured by 18 new aircraft being delivered in the first half of 2017.
Two classes of notes will be issued in the transaction. The $404.94 million Class AA senior tranche has 38.6% loan-to-value (LTV) ratio that will remain constant through the life of the deal. The notes have an initial 'Aa3' rating from Moody's Investors Service and 'AA' from Fitch Ratings.
The $187.55 million Class A subordinate tranche has a maximum LTV of 56.4%. Early ratings are 'A2' and 'A'.
All of the notes amortize over a 12.1-year period.
The interest rates on the notes have yet to be determined. However, American’s the two previous EETC transactions (2016-2 and 2016-3) had coupons of 3.65% (2016-2) and 3.25% (2016-3) for deals that included over 20 aircraft apiece.
American has the option to issue additional subordinate ‘Class B’ certificates during the life of the deal.
American says the deal’s legal structure will be “largely consistent” with its previous $557.65 million 2016-3 EETC series, including an 18-month liquidity facility and a payment waterfall with preferred junior interest on the Class A notes ahead of the principal on the more senior ‘AA’ notes.
The planes being financed and collateralized are all new aircraft, with an appraised value of $1.06 billion.
They include seven Airbus A321-231S narrow-body models; three Boeing 737-800s narrow-body aircraft; and a set of wide-body aircraft: two Boeing 787-8s and a Boeing 787-9. The pool also features five regional Embraer ERJ 175 LR jets.
The largest segment of the order, the A321-231s, are in the best-selling family of A321-200 series narrow-body aircraft by Airbus that have more than 3,109 net orders globally and 1,413 delivered. American is the largest operator of A321-200 models, with 219 of the 519 models in service or on order globally.
The 18 aircraft are among 57 mainline and 12 regional planes that American plans to add to its fleet in 2017, which will help American maintain the youngest average fleet age (9.8 years) among the major U.S. carriers.
All of the aircraft are cross-collateralized in both notes.