This week was what we call “New York Week.” Two conferences and a Wings Gala event, none of which we actually attend, but all three of which bring everyone else into the city. Back-to-back client meetings across Manhattan over four days collided with my own existential realization that I’m not as young as I used to be.

But very productive discussions were had. The three topics on which we were asked to opine for our clients were: 737-10 certification, JetBlue’s loyalty bonds, and United’s three EETC rating downgrades.

We’ll start with the easiest: United’s EETC rating downgrades by Moody’s. The one-notch downgrade on three EETCs - two in the 2016 vintage and one in 2019 - was a hot topic of conversation Thursday. It’s also kind of silly. Moody’s reported LTV ratios as the culprit, which strikes us as odd this far into the EETCs, on different issuance years, yet at the same time.

We don’t normally give our super-secret client conclusions in this free newsletter, but here’s another freebie - whatever. It’s a small downgrade likely triggered by an internal metric that shifted just enough to start a process. One hunch is an update to appraisals that depreciated some aircraft just below the value part of the Loan-to-Value calculation. Whatever. Nothingburger. As of yesterday, the market appeared to agree.

The most-asked question award went to JetBlue and the loyalty bonds. If your eyes glaze over at the word “bonds,” the debt market did a little freak-out over the past few weeks, and JetBlue’s loyalty-program-secured bond is now trading under 50 cents on the dollar. This was an exercise in nuance, and in finding opportunities between the two realities difficult for most to hold in context simultaneously - JetBlue is not in a great spot, and it’s not THAT bad. This led to many deep discussions on risk, reward, and the likely paths between the two.

But the story this week we think was underappreciated was the 737-10 certification. The muted reaction felt similar to the certification of the XLR rather than the bigger deal this actually is.

There are over 1,500 firm commitments for the MAX 10, making this variant the size of an entire aircraft program on day one. However, we’ll note that Boeing doesn’t always break out the different variants selected at order announcement, and the 1,585 number is likely much closer to 2,000.

The -10 brings a lot of capacity to a market that both wants and needs larger gauge, and in a package that is simply the most economical way to deploy up to 230 seats.

Sure, it doesn’t have the range of the A321neo, but nor does it have the weight. But the greatest advantage the 737-10 has over the A321neo is that it’s a 737. If you’re a 737 operator and need seats, it’s a slam dunk.

But it’s also a lot of seats about to hit the market starting next year. For a market that was exclusive to the A321neo, Player 2 has entered the game. That’s going to have an impact on a rapidly closing (closed?) supply and demand gap in the narrowbody space - just as the 600 or so GTF-powered aircraft return to the skies.

That leads us to our three separate conclusions -

Which leads us to our fourth conclusion this week - you know we do this for a living, right?

You’re reading a free newsletter, which we do make sure is valuable, but this isn’t the good stuff. Our research only starts where this newsletter ends, and we dive deep into the data and strategy beyond what you’re reading in the news. We throw it all into a research library, with PDF reports, full chart downloads, and even access to the raw PowerPoint files. Then, we meet with our subscribers and clients to banter about what it all means. We go layers deep, discussing the likely scenarios to play out, and what to watch for to know which one is playing out.

And as one of our customers very rightly (and somewhat painfully) pointed out this week: “You guys are way undercharging for what you offer.”

Yeah, well, maybe.

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