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American Airlines, Inc. has announced the issuance of $273.9 million in Class B Pass Through Certificates, Series 2026-2B, creating a structured financing vehicle to support its fleet expansion and modernization efforts. These certificates are secured by equipment notes linked to 37 aircraft, including new Airbus deliveries and existing owned planes. This financing approach enables American Airlines to distribute proceeds to certificate holders via payments collected on the underlying aircraft financing notes.
Key Points
- NASDAQ: AAL
- American Airlines issued $273.9 million in Class B Pass Through Certificates to fund aircraft acquisition and ownership
- The offering encompasses 37 aircraft: 9 new Airbus A321neo, 5 Airbus A321 XLR, 13 existing Airbus A321-200, 2 Boeing 777-300ER, and 8 new Embraer E175 aircraft
- Final anticipated distribution date for Class B Certificates is August 20, 2035; interest payments to begin semiannually on February 20, 2027
Pass-Through Certificates Structure and Functionality
American Airlines has established a pass-through trust specifically to issue the Class B Pass Through Certificates, distinct from the separate trust structure for concurrently offered Class A Certificates. The Class B Certificates represent interests in the pass-through trust's assets rather than direct obligations of American Airlines or its affiliates. Proceeds from the certificate sales will initially be held in escrow, with American directing funds toward acquiring equipment notes issued on a full recourse basis. This structure separates the airline's corporate balance sheet from the financing vehicle, allowing investors to hold interests secured by specific aircraft within the trust.
The filing reveals that distributions to Class B Certificate holders are subordinated, with Class A Certificates having senior priority in the distribution hierarchy. This tiered setup creates distinct risk profiles for each certificate class, enabling investors to select their preferred position within the capital structure. The equipment notes held by the trusts are secured by security interests in all financed aircraft, providing direct collateral protection to certificate holders.
Aircraft Portfolio Backing the Financing
The equipment notes underlying the Class B Certificates finance a diverse fleet of 37 aircraft spanning multiple types and vintages. The portfolio includes nine newly manufactured Airbus A321neo aircraft scheduled for delivery between July 2026 and February 2027, alongside five Airbus A321 XLR aircraft expected between September 2026 and January 2027. These new-generation narrowbody aircraft reflect American's ongoing fleet modernization aimed at enhancing fuel efficiency and operational economics.
The financing also covers thirteen existing Airbus A321-200 aircraft delivered between July 2013 and July 2014, refinancing previously acquired assets. Two Boeing 777-300ER wide-body aircraft delivered between December 2013 and February 2014 add long-haul capacity to the portfolio. Additionally, eight newly manufactured Embraer E175 regional jets scheduled for delivery between September 2026 and December 2026 expand regional service capacity. This blend of new orders and existing aircraft enables American to optimize its capital structure while securing financing for future deliveries.
Payment Schedule and Distribution Timeline
Interest on the equipment notes held by the Class B pass-through trust will be paid semiannually on February 20 and August 20 each year, with distributions to certificate holders starting February 20, 2027. Principal payments follow the same semiannual schedule beginning on that date, offering certificate holders predictable cash flow timing throughout the holding period.
The Class B Certificates have a final expected distribution date of August 20, 2035, defining the maturity of the instrument. However, the actual distribution schedule depends on American Airlines' ability to service the underlying equipment notes. The filing does not disclose the specific interest rate for the Class B Certificates, noting this will be finalized in a subsequent prospectus supplement.
Liquidity Facility and Credit Support
Natixis, a French joint stock company operating through its New York Branch, will provide a Liquidity Facility for the Class B Certificates. This facility will cover three successive semiannual interest payments on the outstanding Class B balance, offering credit enhancement that ensures interest payments can be made even if temporary cash flow interruptions occur in American Airlines' payments on the equipment notes.
The concurrently offered Class A Certificates have a separate Liquidity Facility detailed in their offering materials. This separation reflects the distinct capital structure positions and risk profiles of each certificate class, ensuring senior Class A Certificates have dedicated liquidity support while junior Class B Certificates benefit from a more limited facility.
Offering Details and Distribution Process
The total face value of the Class B Pass Through Certificates offered is $273.9 million, priced at par to the public. The underwriting syndicate includes Deutsche Bank Securities and Citigroup as joint lead bookrunners, with BNP Paribas also serving as a joint lead bookrunner. Multiple firms share the joint structuring agent role, reflecting the complexity of this securitized aircraft financing.
Underwriters expect delivery of the Class B Certificates in book-entry form through The Depository Trust Company against payment in immediately available funds. The anticipated delivery date is "on or about [date], 2026," to be specified in the final prospectus supplement. The underwriter commission amount is not disclosed in the preliminary filing and will be detailed in final offering materials. The certificates will not be listed on any national securities exchange, targeting institutional and qualified investors.
Capital Structure and Subordination Framework
The documentation establishes that Class A Certificates hold senior distribution rights over Class B Certificates within the pass-through trust. An intercreditor agreement governs the rights and priorities of the certificate classes, ensuring subordination provisions limit Class B holders’ access to cash flows until all senior Class A obligations are met.
Equipment notes are also subject to subordination provisions as outlined in their governing documents. These provisions prioritize among multiple equipment note series if more than one finances the same aircraft. This layered financing approach allows American Airlines to tailor its capital structure to investor risk preferences and cost considerations.
Tax Implications and Investor Guidance
The filing details significant U.S. federal income tax consequences for Class B Certificateholders. The Class B Trust will be treated as a grantor trust for tax purposes, requiring certificateholders to include their proportional share of trust income in taxable income. Investors can expect Schedule K-1 or similar documentation reporting their allocable trust income and principal payments.
Foreign investors face additional tax considerations, including withholding and Foreign Account Tax Compliance Act (FATCA) reporting requirements. The filing advises foreign certificateholders to review applicable tax treaties and withholding rules before investing. Backup withholding may apply depending on certificateholder status and documentation. ERISA-regulated retirement plan investors should consult plan administrators regarding prohibited transaction and plan asset issues.
Risk Factors and Investment Warnings
The prospectus supplement extensively outlines risk factors starting on page S-24, covering risks specific to Class B Certificates and the offering structure. These include aviation industry risks, American Airlines operational risks, and structural risks of securitized aircraft financing.
Class B Certificates represent interests in trust assets rather than direct claims against American Airlines, making certificateholders reliant on the trust's ability to collect on equipment notes and maintain liquidity facilities. In financial distress scenarios, Class B holders are subordinate to Class A holders in accessing funds. The filing emphasizes that investing in these certificates involves material risks and that neither the SEC nor any state securities commission has approved or disapproved the securities.
Regulatory Filings and Forward-Looking Statements
This preliminary prospectus supplement was filed under Rule 424(b)(5) relating to Registration No. 333-293649 and is marked "Subject to Completion," containing preliminary terms to be finalized in the definitive prospectus supplement. The information is preliminary and subject to change, with the registration statement effective upon filing. The document includes disclaimers that the prospectus supplement and prospectus do not constitute offers to sell securities where prohibited.
The filing incorporates by reference the prospectus dated February 23, 2026, which provides foundational disclosures on American Airlines' business, financial condition, and general pass-through trust certificate terms. This supplement adds detailed information on the Class B Certificates, Series 2026-2B, including aircraft specifics, financial terms, and offering mechanics. Investors should review both documents fully to understand the offering structure and American Airlines' financial status.
