§ 41763. Federal credit instruments
(a)
In General.—
Subject to this section and section
41766, the Secretary of Transportation may enter into agreements with one or more obligors to make available Federal credit instruments, the proceeds of which shall be used to finance aircraft purchases.
(b)
Secured Loans.—
(1)
Terms and limitations.—
(A)
In general.—
A secured loan under this section with respect to an aircraft purchase shall be on such terms and conditions and contain such covenants, representatives, warranties, and requirements (including requirements for audits) as the Secretary determines appropriate.
(B)
Maximum amount.—
No secured loan may be made under this section—
(C)
Final payment date.—
The final payment on the secured loan shall not be due later than 18 years after the date of execution of the loan agreement.
(D)
Subordination.—
The secured loan may be subordinate to claims of other holders of obligations in the event of bankruptcy, insolvency, or liquidation of the obligor as determined appropriate by the Secretary.
(E)
Fees.—
The Secretary, subject to appropriations, may establish fees at a level sufficient to cover all or a portion of the administrative costs to the United States Government of making a secured loan under this section. The proceeds of such fees shall be deposited in an account to be used by the Secretary for the purpose of administering the program established under this subchapter and shall be available upon deposit until expended.
(2)
Repayment.—
(3)
Prepayment.—
(A)
Use of excess revenue.—
After satisfying scheduled debt service requirements on all financial obligations and secured loans and all deposit requirements under the terms of any trust agreement, bond resolution, or similar agreement securing financial obligations, the secured loan may be prepaid at anytime without penalty.
(c)
Loan Guarantees.—
(1)
In general.—
A loan guarantee under this section with respect to a loan made for an aircraft purchase shall be made in such form and on such terms and conditions and contain such covenants, representatives, warranties, and requirements (including requirements for audits) as the Secretary determines appropriate.
(2)
Maximum amount.—
No loan guarantee shall be made under this section—
(A)
that extends to more than the unpaid interest and 50 percent of the unpaid principal on any loan;
(B)
that, for any loan or combination of loans, extends to more than 50 percent of the purchase price (including the value of any manufacturer credits, post-purchase options, or other discounts) of the aircraft, including spare parts, to be purchased with the loan or loan combination;
(3)
Fees.—
The Secretary, subject to appropriations, may establish fees at a level sufficient to cover all or a portion of the administrative costs to the United States Government of making a loan guarantee under this section. The proceeds of such fees shall be deposited in an account to be used by the Secretary for the purpose of administering the program established under this subchapter and shall be available upon deposit until expended.
(d)
Lines of Credit.—
(1)
In general.—
Subject to the requirements of this subsection, the Secretary may enter into agreements to make available lines of credit to one or more obligors in the form of direct loans to be made by the Secretary at future dates on the occurrence of certain events for any aircraft purchase selected under this section.
(2)
Terms and limitations.—
(A)
In general.—
A line of credit under this subsection with respect to an aircraft purchase shall be on such terms and conditions and contain such covenants, representatives, warranties, and requirements (including requirements for audits) as the Secretary determines appropriate.
(B)
Maximum amount.—
(D)
Period of availability.—
The line of credit shall be available not more than 5 years after the aircraft purchase date.
(E)
Rights of third-party creditors.—
(F)
Subordination.—
A direct loan under this subsection may be subordinate to claims of other holders of obligations in the event of bankruptcy, insolvency, or liquidation of the obligor as determined appropriate by the Secretary.
(G)
Fees.—
The Secretary, subject to appropriations, may establish fees at a level sufficient to cover all of a portion of the administrative costs to the United States Government of providing a line of credit under this subsection. The proceeds of such fees shall be deposited in an account to be used by the Secretary for the purpose of administering the program established under this subchapter and shall be available upon deposit until expended.
(e)
Risk Assessment.—
Before entering into an agreement under this section to make available a Federal credit instrument, the Secretary, in consultation with the Director of the Office of Management and Budget, shall determine an appropriate capital reserve subsidy amount for the Federal credit instrument based on such credit evaluations as the Secretary deems necessary.
(f)
Conditions.—
Subject to subsection (h), the Secretary may only make a Federal credit instrument available under this section if the Secretary finds that—
(1)
the aircraft to be purchased with the Federal credit instrument is a regional jet aircraft needed to improve the service and efficiency of operation of a commuter air carrier or new entrant air carrier;
(2)
the commuter air carrier or new entrant air carrier enters into a legally binding agreement that requires the carrier to use the aircraft to provide service to underserved markets; and
(3)
the prospective earning power of the commuter air carrier or new entrant air carrier, together with the character and value of the security pledged, including the collateral value of the aircraft being acquired and any other assets or pledges used to secure the Federal credit instrument, furnish—
(g)
Limitation on Combined Amount of Federal Credit Instruments.—
The Secretary shall not allow the combined amount of Federal credit instruments available for any aircraft purchase under this section to exceed—
(h)
Requirement.—
Subject to subsection (i), no Federal credit instrument may be made under this section for the purchase of any regional jet aircraft that does not comply with the stage 3 noise levels of part 36 of title
14 of the Code of Federal Regulations, as in effect on January 1, 1999.
(i)
Other Limitations.—
No Federal credit instrument shall be made by the Secretary under this section for the purchase of a regional jet aircraft unless the commuter air carrier or new entrant air carrier enters into a legally binding agreement that requires the carrier to provide scheduled passenger air transportation to the underserved market for which the aircraft is purchased for a period of not less than 36 consecutive months after the date that aircraft is placed in service.