S&P gives British Airways 2020-1 certificates A

S&P said it assigned an A (sf) preliminary issue rating to the new class A enhanced equipment trust certificates to be issued by British Airways Pass-Through Trust 2020-1.

The proceeds will be deposited with Sumitomo Mitsui Banking Corp., pending delivery of the new aircraft and the issuance of the equipment notes after that.

“Our issuer credit rating on SMBC (A/stable/A-1) is not sufficiently high under our counterparty criteria to support our A+ (sf) preliminary rating on the class A certificates. As such, this will effectively cap the rating on the class A certificates at A (sf) pending the financing of all of the aircraft,” S&P said in a press release.

Proceeds are expected to be used with other funds to repay the $750 million bridge loan facility the airline finalized in May, with the remaining proceeds to finance the purchase of new aircraft.

The transaction will be backed by four Airbus A320-200 aircraft (delivered between June 2009 and June 2010), three new Airbus A320neo models (to be delivered in 2020), two new Airbus A350-1000 (one already delivered and one to be delivered in November) and five new Boeing 787-10 (two already delivered and three to be delivered in November and December), the agency said.

“We understand that these aircraft are integral to BA’s business operations to support the company’s post-Covid-19 air traffic recovery, and that they were already part of BA’s updated fleet plan,” S&P said.

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