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Feature: How the EETC Structure has changed
20 May 2010
Debevoise & Plimpton lawyers consider changes in structuring enhanced equipment trust certificate transactions.
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Debevoise & Plimpton
EETC
John Curry
Raymond Wells
Jaeyong So
Iryna Nikolaieva
Since the first enhanced equipment trust certificate (EETC) transactions in the 1990s, EETCs have become the predominant capital markets vehicle for US airlines to finance aircraft – and they have generally withstood market ups and downs. The year 2007, for example, was strong for EETCs, with more than $4.2 billion-worth of offerings from Continental, United, Southwest, Northwest and Delta.
With conditions in the financial markets worsening in 2008 and ultimately ending in financial meltdown, EETCs disappeared for the next year and a half. During that period there was talk that the structure would never come back or would take years to return only after structural modifications. Then, in July 2009, Continental and American tested the waters with $390 million and $520 million EETC offerings, respectively; these were followed up with Continental’s $644 million and United’s $659 EETC offerings in October 2009 and United’s $810 million and Delta’s $689 million...
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