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United will bulk up widebody fleet through $1.2B EETC issuance

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United Airlines has priced approximately $1.2 billion in new EETC certificates to primarily finance the expansion and modernization of its widebody fleet.

In a Securities and Exchange Commission filing Tuesday, the Chicago-based airline announced it has priced three classes of enhanced equipment trust certificates for the purchase and delivery of nine Boeing widebody aircraft as well as 10 regional long-haul planes manufactured by Embraer.

The notes issued through the United Airlines 2019-2 EETC trust were $702.14 million in Class AA certificates that have a coupon of 2.7% and will amortize over 12.6 years; a Class A junior tranche totaling $286.7 million, with a coupon of 2.9% for over an 8.6-year amortization; and subordinate $232.4 million Class B certificate tranche with a 3.5% coupon.

Moody’s Investors Service assigned an Aa3 rating to the Class AA tranche, A2 to the Class A notes and a Baa2 for the Class B notes.

The 19 aircraft in the deal include three Boeing 787-9 aircraft, four Boeing 787-10 Dreamliners, two Boeing 777-ER and 10 Embraer 175 LL models.

Two of the Dreamliners have already been delivered, while the remaining will be entering United’s fleet between November and next February.

The nine widebody aircraft will add to the earlier arrival of six Dreamliners between November 2018 and March 2019 – planes that were financed in United’s previous EETC note issuance in January. The Dreamliners will serve United’s “higher density” transatlantic routes from its Chicago, Newark and Dulles hubs, according to an investor presentation United filed with the prospectus.

The Embraer jets will primarily serve North and Central American routes from the Newark and Denver hubs.

Credit Suisse, Citigroup and Goldman Sachs are joint structuring agents; all three are also the active lead bookrunners alongside Morgan Stanley.

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Airline EETC
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