United Airlines is expected to wait until there is a resolution to the grounding of the Boeing 787 before tapping the capital markets for its next round of aircraft financing.
The Chicago-based carrier continues to make payments on its existing 787 debt but is expected to hold off on issuing any new enhanced equipment trust certificates (EETCs) backed by its two unfinanced deliveries of the type this year, says a source close to the EETC market on the sidelines of the ISTAT Americas 2013 conference in Orlando today.
United financed the six 787s in its fleet and one of undelivered aircraft with EETCs.
Moody's said that United's 2012 EETC issues were unaffected by the grounding of the 787 in a research note in February. It noted that the US Federal Aviation Administration (FAA) or a national government would have to ground the global fleet of 787s for two years, or three years if the airline is actively trying to return the aircraft to service, before it would be deemed an event of loss under the bond agreements.
The FAA and other aviation regulators around the world grounded the 787 following two battery-related issues in January.
United also has about six Boeing 737-900ERs with deliveries in the second half that are in need of financing, says Gerry Laderman, senior vice-president of finance and treasurer at the carrier, at ISTAT today.
The EETC market is United's "primary source of [aircraft] financing", he says. It raised $2.16 billion in secured debt in the market last year.