Fitch acts on American Airlines EETCs

Fitch Ratings said it rating actions on American Airlines enhanced equipment trust certificates transactions.

“The rating actions are mostly driven by Fitch's recent downgrade of American's issuer default rating to B from B+, but aircraft valuation trends were also a driver for some ratings,” the agency said in a press release.

Fitch said it affirmed most of American's senior EETC tranches and downgraded one tranche. Several senior tranches remain on rating watch negative, as described below.

Fitch downgraded the class A certificates for American's 2013-1 class A certificates to BBB from BBB+. “The downgrade was primarily driven by updated appraisal data for the 777-300ERs that secure the transaction that indicates lower levels of over-collateralization than was expected in prior reviews,” Fitch said.

Fitch affirmed American's other class AA and A certificates.

“The affirmations reflect continuing levels of over-collateralization that allow the transactions to pass either our AA or A level stress tests. It is not yet clear what impact the coronavirus disruption will have on aircraft secondary market values, though Fitch believes that levels of over-collateralization will weaken, given the scale of the impact on the aviation industry,” the agency said.

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