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Aircraft Collateral Risk in Enhanced Equipment Trust Certificates Nov 01
Standard & Poors, Nov 2001
Abstract
Standard & Poor's on Oct. 23, 2001, completed an extensive review of enhanced equipment trust certificates (EETCs) with public ratings, downgrading many of the issues based on reduced asset protection. This comment incorporates the rationale for rating actions disclosed at that time and adds data on the issues and commentary regarding the review. Issues that were downgraded tended to be those with less desirable aircraft (e.g., MD80 series) whose values are not expected to recover fully from the current airline industry downturn and EETCs issued in the mid- to late-1990s whose collateral protection had deteriorated materially over time due to aircraft value erosion (e.g., for B747-200s, B747-400s, and B757-200s) not fully offset by debt amortization. In addition, junior tranches of...
Companies mentioned in this report are: American Airlines Inc.,Boeing Co.,Continental Airlines Inc.,Delta Air Lines Inc.,McDonnell Douglas Corp.,Southwest Airlines Co.,United Air Lines Inc.,US Airways Inc.,Northwest Airlines Corp.,Atlas Air, Inc.,ATA Airlines Inc.,FedEx Corp.,America West Airlines Inc.,Midway Airlines Corp.,AIR 2 US LLC
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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