Commercial Aviation

American Airlines Secures 1.1 Billion Financing for New Aircraft

American Airlines raises $1.1 billion via highly rated EETCs to fund 25 new aircraft, strengthening fleet and financial structure.

Published

8 months ago

4 November 2025

AirPro News Team

Decoding American Airlines’ $1.1 Billion Aircraft Financing Deal

In the world of airline finance, a move by a major carrier like American Airlines Inc. (AAL) always warrants a closer look. Recently, S&P Global Ratings assigned preliminary ratings to a new set of financial instruments from the airline, known as Enhanced Equipment Trust Certificates (EETCs). This isn’t just another transaction; it’s a carefully structured deal worth approximately $1.1 billion designed to fund the acquisition of 25 new Commercial-Aircraft. Understanding the mechanics and ratings of this deal offers a clear window into the airline’s fleet strategy, its credit health, and the sophisticated financial engineering that keeps the global aviation industry flying.

At its core, an EETC is a way for Airlines to buy planes without paying for them upfront. Investors buy certificates, and the money is used to purchase the aircraft, which then serve as collateral. What makes this particular Series 2025-1 transaction noteworthy are the strong investment-grade preliminary ratings of ‘A+ (sf)’ for the senior Class A certificates and ‘BBB (sf)’ for the junior Class B certificates. These ratings stand in stark contrast to American Airlines’ own corporate credit rating of ‘B+’, signaling a high degree of confidence from the rating agency in the structure of this specific deal and the quality of the assets backing it. This financial maneuver highlights the industry’s reliance on secured financing to modernize fleets and manage capital, even for companies with lower corporate credit ratings.

Breaking Down the Transaction: Structure and Collateral

The Series 2025-1 issuance is divided into two main tranches. The Class A certificates, totaling around $884 million, received a preliminary ‘A+ (sf)’ rating. The Class B certificates, valued at approximately $221 million, were assigned a ‘BBB (sf)’ rating. This tiered structure is common in EETCs, creating different levels of risk and return for investors. The senior Class A holders have first claim on the collateral, making their investment safer and thus warranting a higher rating. The ‘sf’ identifier in the ratings simply denotes that this is a “structured finance” instrument, a product whose credit risk is tied to a specific pool of assets rather than the general creditworthiness of the issuing company.

The strength of any EETC lies in the quality of its collateral. In this case, the certificates are backed by a pool of 25 brand-new, in-demand aircraft scheduled for Delivery between October 2025 and March 2026. The fleet is diverse and strategic, comprising two Airbus A321XLRs, twelve Boeing 737 MAX 8s, three Boeing 787-9s, and eight Embraer ERJ 175LRs. According to S&P Global Ratings, these aircraft are considered core to American’s fleet strategy, supporting both its regional and long-haul operations. The Boeing 737 MAX 8 jets alone account for over 43% of the collateral’s estimated value, underscoring their importance to the airline’s future.

A critical metric in these deals is the loan-to-value (LTV) ratio, which measures the debt relative to the appraised value of the aircraft. S&P Global Ratings estimates the initial appraised base value of the 25 aircraft at just over $1.5 billion. The LTV for the Class A certificates is projected to peak at a conservative 58% in 2027, while the Class B LTV peaks at nearly 73% in 2026. These figures are crucial; the lower the LTV, the larger the equity cushion for investors, meaning the aircraft’s value would have to fall significantly before their investment is at risk. This strong collateral coverage is a primary reason for the high ratings.

The ratings for the EETCs are significantly higher than AAL’s ‘B+’ long-term rating due to several factors, including the high likelihood that AAL would agree to continue making payments on the certificates even in a bankruptcy scenario and the quality of the aircraft collateral.

The “Why” Behind the High Ratings: Protections and Expert Opinion

It’s natural to ask how certificates tied to a ‘B+’ rated airline can achieve ratings as high as ‘A+’. The answer lies in a multi-layered system of structural protections designed to insulate investors from the airline’s own credit risk. S&P Global Ratings provides a “credit uplift” based on two main factors: the likelihood of affirmation in bankruptcy and the quality of the collateral. For the Class A certificates, this resulted in a nine-notch uplift from AAL’s corporate rating.

The first layer of protection is the high probability that, even if American Airlines were to face bankruptcy, it would choose to “affirm” the debt and continue making payments on these specific aircraft. Because the planes are new, fuel-efficient, and essential to its operations, the airline would have a strong incentive to keep them. The transaction is also cross-collateralized and cross-defaulted, meaning AAL can’t pick and choose which planes to keep from the pool; it must assume the obligations for all 25 or risk losing them all. This structure heavily favors affirmation.

The second major protection is a liquidity facility, provided by Natixis S.A. (rated ‘A+’), which covers up to 18 months of interest payments for certificate holders. This facility acts as a crucial buffer. If AAL were to stop paying, this liquidity would give investors time to negotiate with the airline or, if necessary, repossess and sell the aircraft without missing interest income. Furthermore, the legal documentation includes language intended to ensure a fair, market-value sale of the aircraft in a repossession scenario, a lesson learned from past airline bankruptcies.

Conclusion: A Strategic Move in a Favorable Market

American Airlines’ Series 2025-1 EETC is a textbook example of how major airlines leverage sophisticated financial tools to fund their growth and modernization. By isolating the credit risk of high-quality, essential aircraft from its broader corporate credit profile, AAL can access capital at more favorable terms. The high preliminary ratings from S&P Global Ratings underscore the market’s confidence in this specific financing structure, the quality of the underlying assets, and the robust legal protections in place for investors.

Looking ahead, the transaction is well-timed. S&P notes the potential for favorable aircraft supply-and-demand dynamics for several years, driven by global fleet replacement cycles and steady passenger growth. This suggests that the value of the collateral is likely to remain strong, further securing the investment. For American Airlines, this deal provides the capital needed to integrate next-generation aircraft into its fleet, enhancing efficiency and competitiveness. For the broader aviation industry, it reaffirms the EETC as a resilient and vital financing mechanism that helps keep the skies busy and the fleets modern.

FAQ

Question: What is an EETC?
Answer: An Enhanced Equipment Trust Certificate (EETC) is a type of financial security used by airlines to finance the purchase of aircraft. Investors buy certificates, and the funds are used to buy the planes, which then serve as collateral for the investment. It includes structural enhancements like liquidity facilities to make it more secure than lending directly to the airline.

Question: Why are the EETC ratings so much higher than American Airlines’ corporate rating?
Answer: The ratings are higher due to strong investor protections that are separate from the airline’s overall financial health. These include the high quality and essential nature of the aircraft collateral, a low loan-to-value ratio, a liquidity facility to cover interest payments, and legal structures that make it highly likely the airline would continue payments even during bankruptcy.

Question: What aircraft are included in this deal?
Answer: The deal is collateralized by 25 new aircraft: two Airbus A321XLRs, twelve Boeing 737 MAX 8s, three Boeing 787-9s, and eight Embraer ERJ 175LRs. These are considered core to American Airlines’ regional and long-haul strategies.

Sources

S&P Global Ratings

Photo Credit: American Airlines

Commercial Aviation

BOC Aviation Leases Eight A321neo Jets to STARLUX Airlines

BOC Aviation signs lease for eight CFM LEAP-1A-powered A321neo aircraft with STARLUX Airlines, deliveries from 2028.

Published

5 hours ago

2 July 2026

AirPro News Team

BOC Aviation Limited has finalized a lease agreement with Taiwan-based STARLUX Airlines for eight Airbus A321neo aircraft, a transaction that will expand the carrier’s narrowbody fleet to support regional network growth.

Announced in a press release on July 1, 2026, the aircraft will be sourced directly from the Singapore-based lessor’s existing orderbook. Deliveries to STARLUX Airlines are scheduled to commence in 2028, providing the airline with additional capacity as it continues to scale its international operations.

Fleet Expansion and Technical Specifications

The eight leased narrowbody jets will be powered by CFM International LEAP-1A engines. The Airbus A321neo selection aligns with STARLUX Airlines’ strategy to operate modern, fuel-efficient aircraft across its regional routes.

Paul Kent, Chief Commercial Officer at BOC Aviation, highlighted the operational benefits of the aircraft type for the growing Taiwanese carrier.

“The A321NEOs that will be delivered to STARLUX from 2028 are amongst the most fuel-efficient aircraft in production and should demonstrate their versatility in supporting the airline’s regional network growth,” Kent stated.

Strategic Growth for STARLUX and BOC Aviation

The lease agreement supports STARLUX Airlines as it broadens its route network. The carrier currently serves 32 destinations and is actively expanding its international reach. This includes preparations to launch its first European route, with service to Prague scheduled to begin on August 1, 2026.

For BOC Aviation, the transaction reinforces its leasing footprint in the Asia-Pacific market. As of March 31, 2026, the lessor reported a portfolio of 813 aircraft and engines, encompassing owned, managed, and on-order assets. The company’s global customer base includes 88 airlines across 46 countries and regions.

“We are delighted to be supporting Taiwan’s newest international airline with this landmark transaction for eight latest technology aircraft,” Kent added in the July 1 announcement.

AirPro News analysis

We view this transaction as a mutually beneficial alignment of BOC Aviation’s robust orderbook and STARLUX Airlines’ aggressive expansion timeline. By securing delivery slots for 2028 through a major lessor, STARLUX Airlines bypasses the extended backlog currently facing direct orders from Airbus SE. The choice of the Airbus A321neo equipped with CFM LEAP-1A engines provides the carrier with the range and economics necessary to deepen its regional footprint in Asia while it simultaneously deploys widebody aircraft on new long-haul routes to Europe and North America.

Sources: BOC Aviation

Photo Credit: STARLUX Airlines

Commercial Aviation

World Star Aviation Delivers Second 737-400SF to Skyway Airlines

World Star Aviation completes a two-aircraft lease with Skyway Airlines, delivering a second 737-400SF freighter to the Philippine cargo carrier.

Published

6 hours ago

2 July 2026

AirPro News Team

World Star Aviation (WSA) has finalized a two-aircraft lease agreement with Philippine cargo operator Skyway Airlines Inc. through the delivery of a second Boeing 737-400SF freighter.

Announced in a company press release on June 26, 2026, the handover increases Skyway’s total fleet to three aircraft. The addition is intended to support the carrier’s network expansion across the Asia-Pacific region.

Completing the two-aircraft agreement

The delivery concludes an arrangement that began with a letter of intent signed in June 2025. World Star Aviation delivered the first Boeing 737-400SF of the pair on October 27, 2025. That initial handover marked the lessor’s first registered cargo-aircraft in the Philippines.

Skyway Airlines Inc. Chief Executive Officer José Peralta stated the new capacity will directly support regional operations.

“It is with great excitement that we welcome our third aircraft, the second one from WSA. This addition will further enhance Skyway’s network within the Asia-Pacific region. We are grateful to WSA for their professionalism and dedication in delivering this aircraft,” Peralta said.

Lessor strategy and regional growth

For World Star Aviation, the transaction reinforces its footprint in the Asia-Pacific cargo sector. The lessor has positioned itself to supply converted narrowbody freighters to growing regional operators.

André Abreu, Vice President Marketing & Sales at World Star Aviation, highlighted the ongoing collaboration between the two companies.

“This second delivery reflects the strong relationship WSA has built with Skyway Airlines since its debut as a cargo airline. We are grateful for Skyway’s continued trust in our team and proud to support the airline’s growth with cost-effective freighter solutions,” Abreu said.

AirPro News analysis

We view the continued reliance on Boeing 737 Classic freighters, such as the 737-400SF, as a practical strategy for emerging cargo airlines in the Asia-Pacific market. While newer generation conversions like the Boeing 737-800BCF are becoming more prevalent, the 737-400SF offers a lower capital entry point for operators looking to scale capacity quickly. Skyway’s decision to triple its fleet over the past year indicates strong regional demand for dedicated narrowbody freight services.

Sources: World Star Aviation

Photo Credit: World Star Aviation

Commercial Aviation

Emirates SkyCargo Launches Boeing 777-300ERSF Operations

Emirates SkyCargo becomes the first combination carrier to operate the Boeing 777-300ERSF, flying Hong Kong to Dubai on June 30, 2026.

Published

17 hours ago

1 July 2026

AirPro News Team

Emirates SkyCargo has commenced commercial operations with its first Boeing 777-300ERSF, completing an inaugural flight from Hong Kong to Dubai on June 30, 2026. The deployment makes the Dubai-based operator the first combination carrier to utilize the passenger-to-freighter converted aircraft, commonly known in the industry as the “Big Twin.”

In a press release issued on June 30, 2026, Emirates detailed the integration of the converted freighter, registered as A6-EBK, into its expanding logistics network. The aircraft introduces a 25 percent increase in cargo volume compared to the production Boeing 777-F, targeting the high-volume, low-density requirements of the global e-commerce sector.

Fleet expansion and capacity metrics

The introduction of the Boeing 777-300ERSF marks the sixth freighter inducted into the Emirates SkyCargo fleet since March 2026, following the delivery of five production Boeing 777-F aircraft. The converted airframe provides 811 cubic meters of cargo volume and a payload capacity of 100 tonnes.

The spatial design of the 777-300ERSF accommodates 47 total pallet positions, which is 10 more than the standard Boeing 777-F. This volumetric advantage aligns with shifting air freight demands, as e-commerce goods currently constitute approximately 20 percent of global air cargo tonnage.

Badr Abbas, Divisional Senior Vice President of Emirates SkyCargo, stated that the induction represents the next step in the expansion of the fleet and operational agility.

“We are optimising our fleet assets by converting older Boeing 777-300ER passenger aircraft to meet the growing demand for air cargo capacity to transport goods rapidly across the world,” Abbas said.

The Big Twin conversion program

The Boeing 777-300ERSF conversion program is a joint venture launched in 2019 by aircraft lessor AerCap and Israel Aerospace Industries (IAI). The modification process engineers older passenger airframes into dedicated freighters, extending the operational lifecycle of the Boeing 777-300ER.

The specific aircraft deployed by Emirates, A6-EBK, was originally delivered to the airline as a passenger jet in 2006. The conversion program achieved regulatory clearance in September 2025, receiving its Supplemental Type Certificate (STC) from the FAA and the Civil Aviation Authority of Israel (CAAI).

Emirates plans to continue its fleet expansion through the end of the year. The carrier expects Delivery of five additional Boeing 777-F aircraft and one more converted Boeing 777-300ERSF by December 2026. Three additional converted Boeing 777-ERSFs are scheduled to join the fleet in 2027.

Network growth and strategic positioning

The rapid induction of new capacity has facilitated a significant expansion of the Emirates SkyCargo route map. The carrier’s global freighter network has grown from just over 40 destinations in February 2026 to 62 current destinations.

Abbas noted that the combination of the growing Boeing 777-F fleet and the new converted freighters allows the airline to provide scalable capacity and connectivity through its Dubai hub.

AirPro News analysis

We view the deployment of the Boeing 777-300ERSF by a major combination carrier like Emirates as a strong validation of the IAI and AerCap conversion program. While purpose-built freighters like the Boeing 777-F remain the backbone of heavy lift operations, the volumetric efficiency of the 777-300ERSF fills a specific and growing niche. With e-commerce driving demand for space over sheer weight, converting fully depreciated passenger airframes offers a capital-efficient method to capture market share. The aggressive delivery schedule through 2027 indicates Emirates is positioning itself to dominate the high-volume logistics corridors connecting Asia, the Middle East, and Europe.

Sources: Emirates

Photo Credit: Emirates