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Author Topic: Equipment Trust Certificates  (Read 166 times)

Offline George Bush

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  • Posts: 279
Equipment Trust Certificates
« on: June 24, 2018, 10:00:54 PM »
So this request spawns from another off hand comment I had made that when I did my research I grew interested in.

Equipment Trust Certificates (ETC), investors place money into a trust that purchases the aircraft and then leases it to the airline — which  then gets to keep it upon maturity of the instrument. Aircraft-financing instruments can get more complex still: For example, Enhanced Equipment Trust Certificates (EETC) may be structured in several tranches or tiers, each with different levels of seniority. The lower the tier, the higher the expected return (and the risk!)

So Rent to own leasing whether that is our current leasing model with just an option for ETC. Or an investment model for airlines to create funds in airlines for the risk reward. Allowing us to play with piles of cash that accrue over time.

I would expect to see higher monthly running costs with the reward of owning air-frames at the completion.

Offline Zobelle

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Re: Equipment Trust Certificates
« Reply #1 on: June 24, 2018, 11:24:54 PM »
Would be cool, tie it into the credit rating system.

Would there be an option to buy out the “ETC” early just like with leases (which if you took out 15yr, god help you.)

Offline George Bush

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  • Posts: 279
Re: Equipment Trust Certificates
« Reply #2 on: June 25, 2018, 03:55:49 AM »
Would be cool, tie it into the credit rating system.

Would there be an option to buy out the “ETC” early just like with leases (which if you took out 15yr, god help you.)

I would say no and if you could it would be at a steep penalty to the investors benefit.

 

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