An equipment trust certificate (ETC) is a financial security used in aircraft finance, most commonly to take advantage of tax benefits in North America.
Therefore, ETCs are a form of secured debt financing similar to a mortgage.
Because the aircraft is not owned by the airline until maturity, the aircraft is not considered airline property for the purposes of bankruptcy; however, alternative forms of financing such as mortgage and securitization lead to the same result, making this a relatively minor advantage in comparison to the tax benefits.
[2] An Enhanced ETC, also known as a Double-E TC, is similar to a conventional ETC except that the security has been divided into two or more classes of securities, each with different payment priorities and asset claims.
EETCs issues are similar to securitization transactions in that ownership remains with a separate trust rather than the operator, which has different tax implications.