KBRA Comments on the Worldwide Grounding of the Boeing 737 Max Following a Second Tragic Incident

With our deepest regrets following the second crash of a 737 Max jet, which resulted in the tragic loss of 157 lives onboard Ethiopian Airlines Flight 302 to Kenya on March 12, KBRA details our view on the potential credit impact for both airlines and aircraft lessors, as well as our rated aviation transactions. As of March 13, all 737 Max variants are grounded by the relevant aviation regulatory bodies due to safety concerns. On December 3, 2018, following the crash of the 737 Max 8 jetliner Lion Air Flight 610, KBRA released a report noting our approach for liquidity stresses for aircraft, should there be long-term implications for the value of the 737 Max aircraft series.

In this comment, we discuss the financial impact for aircraft lessors and airlines in the event of a prolonged grounding of the 737 Max, as well as the potential stress it could cause for manufacturer Boeing. There continues to be no 737 Max aircraft in any of the Aviation ABS transactions rated by KBRA.

The report is available here.

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus, is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Analytical:

Marjan Riggi,
Senior Managing Director
(646) 731-2354
[email protected]

Thomas
Moore, Analyst
(646) 731-3375
[email protected]