American seeks approval for $750m EETC

Washington DC
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American Airlines is seeking bankruptcy court approval for an up to $750 million enhanced equipment certificate trust (EETC) deal backed by 13 aircraft.

The 2013-1 issue would be split into an A tranche with a maturity of 5.5 to 12.5 years, and a B tranche with a maturity of 5.5 to eight years, according to a court filing. It would be backed by four new Boeing 777-300ERs with deliveries from April to August, and one 777-200 and eight Boeing 737-800s currently in its fleet.

Fort Worth-based American hopes to take advantage of low interest rates on secured aircraft debt with the issue.

US Airways closed 4.625% and 6.75% all-in interest rates on its $546 million two-tranche 2012-2 EETC deal in October 2012, while United Continental-subsidiary Continental Airlines achieved 4% and 5.5% rates on its $843.8 million two tranche 2012-2 issue in September. Delta Air Lines received 4.75% and 6.875% rates on its $480 million two-tranche deal in June.

American is also seeking court approval to repay outstanding debt against the owned aircraft using cash or the proceeds of the deal, according to the filing.

The 2013-1 issue is separate from an up to $1.5 billion EETC deal backed by aircraft in its fleet that the airline received court approval for on 18 January, it says.

Deutsche Bank, J.P. Morgan and Morgan Stanley are underwriting the 2013-1 issue. Natixis is the depositary and Wilmington Trust is the trustee.