Air Trust

An aviation milestone was the announcement last week that American Airlines planned to sell equipment trust certificates to finance 60% of the cost of its 20 new Douglas planes. It was the first time that anyone ever considered planes suitable collateral for bonds, though equipment trust certificates backed by locomotive or hopper cars are an old story with railroads.

Buyer of the certificates will be Jesse Holman Jones's RFC. Nevertheless, Mr. Jones is not noted for shoestring commitments. Douglas Sleepers cost more than $100,000 each, and after all 20 are delivered to American Airlines, Mr. Jones's investment will be $1,250,000. This sum will be paid off in installments within four years.

As in a railroad equipment trust, ownership of the air equipment will be vested in a trustee until the last installment is paid. On railroad rolling stock this ownership is revealed by a plaque with a legend like this: "New York Central Lines Equipment Trust of 1924. Guaranty Trust Co. of N. Y., trustee, owner." On a coach the plaque is usually riveted to the side of the car, on a locomotive below the cab. On American Airlines equipment a plaque to the same effect will probably be attached to the fuselage under the wing.

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