ANALYSIS: Appraisers differ by 6% on Continental 2012-2 EETC 737-900ERs

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Continental Airlines - part of United Continental Holdings - asked three independent appraisers Aircraft Information Services (AISI), BK Associates and Morten Beyer & Agnew to provide adjusted base value opinions on 22 Boeing aircraft as part of its $844 million pass through certificates, Series 2012-2.

Although the equipment notes will be secured by 21 aircraft, appraisers gave half-life and adjusted base value opinion on 18 Boeing 737-900ERs scheduled for delivery between November 2012 and July 2013.

The new 737-900ERs are equipped with CFM56-7B26E engines, while the 787-8 are powered by GEnx-1B70 engines.

In the $892 million Pass Through Certificates, Series 2012-1 issued in March this year, which also features new 737-900ER and 787-8 deliveries, appraisers differed by 12-13% on the new 737-900ER deliveries.

This time, the discrepancy between appraisers was about 6%.

A new 737-900ER delivery has a base value of between $53.51 million and $53.60 million depending on the month of delivery this year, according to AISI. For the first seven months of 2013, base values vary between $53.69 million and $54.22 million.

In March AISI base values varied between $55.52 million and $56.44 million for the 2012 deliveries. A November 2012 delivery was valued at $56.35 million, compared with $53.51 million now.


BK Associates' base values for the type have firmed up slightly over the past six months. Today they are within the $50.25 million and $51 million range, compared with $49.2 million and $50.1 million six months ago. A November 2012 delivery was valued at $50.15 million in March, compared with $50.25 million now.

MBA's new base values for the type are between $52.99 million and $53.69 million, down from $53.8 million and $54.7 million in March. However a November delivery is valued now at $52.99 million compared with $54.64 million six months ago.

In Continental's $844 million Pass Through Certificates, Series 2012-2 offering, the $711.6 million A tranche matures in October 2024. The $132.2 million B tranche matures in October 2020.

Credit Suisse's New York Branch will provide the initial liquidity facility for the Class A and B certificates. Natixis is the depositary agent.

Credit Suisse and Morgan Stanley are joint structuring agents and lead bookrunners. Credit Suisse Securities, Morgan Stanley, Citigroup, Deutsche Bank Securities, Goldman Sachs & Co, Jefferies & Company and Natixis Securities Americas are joint underwriters.

The equipment notes will be issued to finance Continental's purchase of 18 new Boeing 737-900ER aircraft and three new 787-8 aircraft.