Moody’s gives Air Canada EETCs Aa3, A2, Baa3

Moody's Investors Service said it assigned ratings to Air Canada's pass-through certificates (EETCs), series 2017-1 the company offered on Dec. 7: $400.108 million class AA with a legal final due date of July 15, 2031 at Aa3, $172.198 million class A with a legal final due date of July 15, 2031 at A2 and $146.875 million class B with a legal final due date of July 15, 2027 at Baa3.

The scheduled maturity dates precede the respective legal final due dates by 18 months.

Proceeds will help fund the purchase of 13 newly manufactured aircraft that will deliver to Air Canada between January 2018 and May 2018.

Air Canada’s corporate family rating is Ba3 and is unaffected by this action.

The outlook is stable.

“The ratings of the Certificates reflect the credit quality of Air Canada, the credit benefits of the typical features of Enhanced Equipment Trust Certificates (EETCs), including the applicability of the Cape Town Convention as implemented in the federal and provincial laws of Canada, cross-default and cross-collateralization of the equipment notes, separate 18 month liquidity facilities on each class, and cross-subordination pursuant to the Intercreditor Agreement,” Moody’s said in a news release.

“Moody's believes that the nine Boeing 737 MAX 8 and the four Boeing B787-9 aircraft models will remain core to Air Canada's network throughout the financing's 12-year term, making it likely that Air Canada would affirm this financing in an insolvency scenario.”

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