[0] Fitch: TWA Bankruptcy Filing May Affect Aircraft Securitizations.Business Editors NEW YORK--(BUSINESS WIRE)--Jan. 11, 2001 Trans World Airlines Trans World Airlines, commonly known as TWA, was a major American airline company that was acquired by American Airlines in April 2001. For many years it was headquartered at the Kansas City Downtown Airport, as well as midtown Manhattan in New York City. (TWA TWA Time-weighted average, see there ) filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. on Wednesday, Jan. 10, 2001. The TWA bankruptcy filing is one part of American Airlines' plan to acquire the airline, and may lead to a renegotiation of certain TWA aircraft leases. TWA is an obligor in seven different aircraft operating lease Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. pool securitizations rated by Fitch. As a percentage of initial appraised value An appraised value (USA) or mortgage valuation (Australia) pertains to the assessed value of real property in the opinion of a qualified appraiser or valuer. It is usually used as a pre-qualification & risk-based pricing factor related to the issuance of mortgage loans by a , the aircraft leased by the airline place TWA among the top five obligors in the first four of the seven transactions listed. The aircraft in all transactions consist of recently manufactured, stage III noise compliant, Boeing or McDonnell Douglas McDonnell Douglas was a major American aerospace manufacturer and defense contractor, producing a number of famous commercial and military aircraft. It merged with Boeing in 1997 to form The Boeing Company. commercial jet aircraft. Ranked by percentage of initial appraised value, the exposures to TWA leased aircraft in each of these seven securitizations are set forth below: -- 1. Pegasus Aviation Lease Securitization, series 1999-1 (top obligor in the pool and 16% of initial appraised value) -- 2. Pegasus Aviation Lease Securitization II, series 2000-1 (10.7% of initial appraised value) -- 3. Embarcadero Aircraft Securitization Trust, series 2000-1 (9.7% of initial appraised value) -- 4. Morgan Stanley Aircraft Finance (5.3% of initial appraised value) -- 5. AerCo Limited (3.3% of initial appraised value) -- 6. Aviation Capital Group Trust, series 2000-1 (2.1% of initial appraised value) -- 7. Airplanes Pass Through Trust (50 basis points of initial appraised value) Fitch is concerned that the rejection of certain TWA leases or the renegotiation of terms on certain TWA leases by American Airlines American Airlines Major U.S. airline. American was created through a merger of several smaller U.S. airlines and incorporated in 1934. It continued to buy the routes of other airlines, becoming an international carrier in the 1970s; its routes include South America, the may adversely affect the cashflows available to the noteholders in the above mentioned securitizations. As a part of the cashflow stress scenarios run during the rating process, Fitch applies a level of lease payment reductions to address situations such as this. Fitch is currently monitoring the developments concerning this proposed acquisition, however, the actual impact of any potential lease renegotiations may not be known for several months. |
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