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Fitch: TWA Bankruptcy Filing May Affect Aircraft Securitizations.

Business Editors

NEW YORK--(BUSINESS WIRE)--Jan. 11, 2001

Trans World Airlines (TWA) filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court 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 pool securitizations rated by Fitch. As a percentage of initial appraised value, 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 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


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 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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Publication:Business Wire
Date:Jan 11, 2001
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