American Airlines Files $1.14 Billion Aircraft-Backed Bond Sale Amid Rising Fuel Costs
American Airlines is launching a $1.14 billion bond sale backed by aircraft to strengthen its financing amid rising fuel costs. The deal includes enhanced equipment trust certificates linked to 32 planes, with a significant portion expected to yield around 5.625%. Despite a B+ credit rating from S&P, the bonds are anticipated to receive higher ratings. This move follows a previous issuance and comes as the airline faces increased fuel expenses, potentially leading to a loss in 2026. Major banks are facilitating the transaction, indicating a reliance on structured debt markets.
American Airlines is moving back into the credit markets with a $1.14 billion bond sale backed by a pool of aircraft, as the carrier looks to reinforce its financing position while cost pressures build. The deal is structured as enhanced equipment trust certificates tied to 32 new and existing planes, split into multiple tranches. The longer portion, totaling $905.04 million, carries an average life of 7.7 years and is being discussed at a yield around 5.625%, according to a person familiar with the matter.
The structure reflects how American continues to access investment-grade markets through secured financing despite its underlying credit rating. S&P Global Ratings assigns the airline a B+ rating, while the longer-dated bonds in this transaction are expected to be rated A, with Fitch Ratings placing them one notch lower. This approach mirrors the airline's October issuance, when it sold $883.63 million of similar notes with a weighted average life of 8.7 years at a 4.9% yield, suggesting the company could continue leaning on asset-backed structures to secure more favorable borrowing terms.
The timing comes as rising fuel costs begin to weigh more heavily on the outlook. American recently lowered its full-year earnings target, indicating it may end 2026 with a loss as it absorbs about $4 billion in additional fuel expenses tied to higher oil prices amid geopolitical tensions. With Goldman Sachs, MUFG, and Morgan Stanley acting as bookrunners, the transaction could signal continued reliance on structured debt markets as the airline navigates a more volatile cost environment.
