US Airways' bankruptcy filing could set a new precedent for enhanced equipment trust certificates (EETCs), as the structure has yet to be tested in bankruptcy court. However, certain investors, specifically the G class certificate holders, benefit from third party liquidity.
Additionally, all the US Airways EETC bonds have Section 1110 protection, which means the airline has 60 days to decide if it will continue to make payments on the notes or return the equipment (aircraft in this case). The situation, however, could get dicey. Factors such as declining aircraft resale values and the absence of legal precedent are at the forefront.