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American Airlines EETC 2019-1 Sees Resilient “Base” Values

December 9, 2019

The American Airlines 2019-1 EETC, featuring 35 aircraft, sees reasonably strong base values and some measure of consistency among the three ISTAT certificated appraisers.

The 35 aircraft comprise (a) six Airbus A321-231S aircraft delivered new to American between December 2015 and May 2016, (b) three Boeing 737-800 aircraft delivered new to American from January 2016 to February 2016, (c) three Boeing 787-8 aircraft delivered new to American in May 2015 and February 2016, (d) nine Embraer E175LR aircraft delivered new to American from April 2015 to July 2019, (e) seven newly manufactured Airbus A321-253NX aircraft currently scheduled for delivery to American during the period from June 2020 to September 2020 and (f) seven newly manufactured Embraer E175LR aircraft currently scheduled for delivery to American during the period from September 2019 to January 2020.

The aircraft were appraised by three U.S. based appraisers as rarely are non U.S. appraisers used in EETC transactions. The basis of the valuation was the theoretical “Base Value” adjusted for the maintenance status. The A321ceos represents high gross weight examples offering considerable range flexibility although some do have a very low weight which has warranted a reduction in value. The values of the A321ceo aircraft are perhaps some $2-3 million higher than the market values and surprisingly there is a near ten percent differential between Appraiser A and Appraiser C. For the A321neos, the values are relatively close to the market value with consistency among the three appraisers. American has always been something of an anomaly when it comes to the B737-800 as the aircraft usually have a low weight but a high engine thrust. the base values attributed to the aircraft see Appraiser A give the highest value whereas with the A321 it gave the lowest. There is more than ten percent difference between Appraiser A and Appraiser B with the market value being nearer to Appraiser B. The base values attributed to the B787-8s represent the greatest concern as Appraiser A and B are nearly 20 percent higher than the market value with Appraiser C being ten percent lower than the other two. The base values will not reflect the current market realities affecting the B787-8 and therefore may appear reasonable. The values given for the E175s are consistent among all three appraisers although they are more than ten percent higher than the market value. Again the EETC assumes three percent per annum reduction with respect to the base value projections but Moody’s uses 7.5 percent in year 1 and 4 percent per year thereafter for the A321neos, 7.5 percent in year 1 and 5 percent per year thereafter for the A321-200s, B737-800s and the B787-8s, and 7.5 percent in year 1 and 6 percent per year thereafter for the E175LR regional jets.

 

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