GE Capital Aviation Services (GECAS) announced an order for 75 737 MAX 8 aircraft yesterday, with an approximate value of $8.25 billion at list prices. The follow-on order increases the GECAS firm order book for the 737 MAX to 170 airplanes, the largest of any aircraft leasing company.
“These new orders will enable GECAS to serve our clients’ needs — assisting in managing their fleets, transitioning aircraft and providing new equipment,” said Alec Burger, President and Chief Executive Officer of GECAS. “Our customers want the latest technology and fuel efficiency, and the CFM International LEAP-1B engines on these aircraft deliver outstanding productivity and reliability in the single-aisle market.”
The Max 8 orderbook was further boosted by Travel Service’s firm order for five 737 Max 8s, which adds to the Czech airline’s previously placed order for three 737 MAXs at the Paris Air Show in 2013. Travel Service will receive 30 direct purchased and leased 737 MAX airplanes in total starting in 2018.
Despite having issued three enhanced equipment trust certificate transactions in 2016, American Airlines has kicked off the new year with another EETC deal. The capital markets are strong at the moment and are certainly showing no sign of saturation for American paper since this deal has been upsized to $785 million due to demand.
American Airlines Series 2017-1, which priced yesterday, is comprised of a AA tranche and a single-A tranche. The B notes have been reserved for a later date. The $536.811 million class AA certificates, due in February 2029, have an initial loan to value (LTV) of 39.5% and were rated AA by Fitch Ratings with a coupon of 3.650% and a 20bps make-whole spread over treasuries. The $248.627 single-A notes, rated A by Fitch, have an initial LTV of 56.4% and a coupon of 4.00%, with a 25bps spread over treasuries.
The notes are secured on a portfolio of 18 aircraft: seven new A321-231S aircraft scheduled for delivery to American from January 2017 to April 2017; three new 737-800 to be delivered from March 2017 to May 2017; two new 787-8s for delivery to American in February 2017 and March 2017; one new 787-9 aircraft to be delivered in January 2017; and five new Embraer ERJ 175 LR aircraft for delivery from February 2017 to April 2017.
Credit Suisse, Citi and Deutsche Bank are the joint structuring agents and lead bookrunners. Goldman Sachs, Morgan Stanley, Merrill Lynch, Barclays Capital, JPMorgan, BNP Paribas, Credit Agricole Securities, ICBC Standard Bank and US Bancorp are joint bookrunners.
Citi is providing a separate liquidity facility for each of the Class AA Certificates and Class A Certificates.