American Airlines raised $1.14 billion through a bond sale backed by a group of aircraft, using the proceeds to finance 32 planes.
The deal was structured in two parts using enhanced equipment trust certificates (EETCs), a form of debt secured by aircraft. The larger portion, worth about $905 million with an average life of 7.7 years, was priced to yield 5.25%, lower than initial expectations. A shorter-term tranche, with an average life of 5.5 years, was priced at a 5.75% yield.
Despite holding a below-investment-grade corporate rating, American Airlines can access higher-grade debt markets through this structure, as the bonds themselves are backed by tangible assets.
The financing comes at a challenging time for airlines, as rising fuel costs—driven in part by geopolitical tensions—continue to pressure margins. American recently lowered its earnings outlook, citing billions in additional fuel expenses.
Major banks including Goldman Sachs, MUFG, and Morgan Stanley led the bond offering.