KBRA Upgrades OneSky Flight LLC’s 2021-1 EETC Class B and C Ratings; Affirms Class A Rating

KBRA upgrades the ratings for OneSky Flight LLC’s 2021-1 Enhanced Equipment Trust Class B Certificates and Class C Certificates to BBB (from BBB-) and BB (from BB-), respectively, and affirms the A rating for OneSky Flight LLC’s 2021-1 Enhanced Equipment Trust Class A Loans (together, “the Securities”). The Securities are guaranteed by OneSky Flight LLC ("OneSky" or "the company"), a leading provider of private aviation services, based in Cleveland, Ohio. The Outlook for the ratings is Stable.

Key Credit Considerations

The upgrades of the subordinate Securities classes reflect material declines in transaction loan-to-values (LTVs) driven by principal amortization and recent aircraft collateral values provided to KBRA which are materially higher than initial appraisal values at transaction close in 2021. Material appreciation of business jet values have been observed since 2021 due to a combination of higher post-pandemic private flight demand and limited manufacturer production capacity driving record order backlogs, dynamics which are expected to support aircraft values at least in the medium term. The lower LTVs with strong collateral enhancement levels drove improvement in KBRA’s expected loss results even under more conservative collateral stress assumptions compared to valuation declines observed during historical market downturns.

The ratings for the Securities reflect KBRA’s expected loss analysis and our view of the aircraft collateral pool as strategically important to OneSky as well as KBRA’s view of the company as having an appropriate credit profile to support the transaction’s ratings. The ratings are supported by a strong collateral pool of 85 good-quality business jets as of December 31, 2024, diversified across models and sizes, which are viewed as strategically important to OneSky given that they represent the majority of OneSky’s fully-owned aircraft fleet and a significant portion of its total operated fleet, which supports a high likelihood of affirmation of the transaction in the event of a bankruptcy or restructuring of OneSky. The ratings consider the priority of payments for the senior loans and subordinated certificates, the LTV of each security, and the payment-in-kind (“PIK”) feature for up to 18 months of interest payments on all Securities classes, as well as structural protections of the EETC structure and benefits from section 1110 of the US Bankruptcy Code available to the Securities holders. The ratings also reflect the potential volatility and illiquidity of business jet aircraft collateral in a market downturn.

Rating Sensitivities

A ratings upgrade in the near future is not expected. The Stable Outlook could be revised to a Negative Outlook or the ratings could be downgraded if private aviation flight demand declines significantly and leads to significant increases in transaction loan-to-value ratios and/or if OneSky’s credit profile deteriorates significantly such that the likelihood of collateral pool affirmation and OneSky operating as a going concern, in KBRA’s view, significantly declines. In addition, a decrease in the collateral pool’s strategic importance to OneSky’s operations, in KBRA’s view, could lead to a downgrade.

To access ratings and relevant documents, click here.

Methodologies