Fitch rates AAdvantage IP financing BB

Fitch Ratings said it assigned an expected BB rating to about $7.5 billion in financing to be co-issued by AAdvantage Loyalty IP Ltd. and American Airlines, Inc. The rating considers a maximum program capacity of $10 billion.

“AAdvantage IP is a special purpose vehicle (SPV) incorporated under the laws of the Cayman Islands for the purpose of this transaction. AAdvantage IP is an indirect wholly owned subsidiary of American Airlines,” the agency said in a press release.

The proceeds will be used to pay down the U.S. Treasury loan under the CARES Act and to fund the reserve account. AAdvantage IP will, in turn, use the proceeds to make an intercompany loan to American, where the proceeds would be used for general corporate purposes, which may include the repayment of other indebtedness.

The term loan and notes are pari passu and supported by the same collateral and security package; the co-issuer and debt facilities are rated an expected BB with a negative outlook.

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