CDB Aviation enters into a sale-and-leaseback agreement worth $153 million USD with Frontier Airlines for three Airbus A320neo aircraft

Project narrative

On June 29, 2020, CDB Aviation Lease Finance DAC — the wholly-owned Ireland-based subsidiary of China Development Bank Financial Leasing Co., Limited (CDB Leasing) — entered into a sale-and-leaseback agreement worth an estimated $153 million USD with Frontier Airlines, Inc. — a Denver, Colorado-headquartered low-cost American airliner of which American private equity firm Indigo Partners, LLC has a controlling interest in it — for three Airbus A320neo aircraft. The three narrowbody aircraft were newbuilt delivered by Airbus' assembly line in Mobile, Alabama and were equipped with the LEAP-1A engine. The aircraft were to set to work for Frontier's passenger service on U.S. domestic routes. The use of the proceeds of the sale-and-leaseback agreement were to be used by Frontier Airlines for general corporate purposes The three aircraft were expected to be delivered in late July 2020. All three aircraft were delivered in late July 2020 on or around July 29, 2020. The three aircraft included Frontier's 100th A320 aircraft and were named Chinook the Gray Wolf, Cortez the Green Turtle, and Parish & Daisy the Burrowing Owls. The agreement with CDB Aviation helped Frontier avoid defaulting on its order agreement with Airbus or having to pay for the aircraft itself. In March 2020 framework agreement, Frontier Airlines entered into the sale-and-leaseback of six undelivered new Airbus A320neo aircraft on order to Frontier with AMCK Aviation. One aircraft was delivered in March 2020. However, when negotiations over the deferral of rent on leases on 14 other aircraft owned by AMCK Aviation leased to Frontier (related to the outbreak of the COVID-19 pandemic which heavily negatively impacted airlines) fell through, AMCK Aviation terminated the framework agreement, leaving the Frontier without lessor financing for the other five aircraft on order; either Frontier would default on its order agreement with Airbus or it would have to fully fund the deliveries on its own. Its sale-and-leaseback agreement with CDB covered three of the five aircraft, and then a later October 2020 agreement with Jackson Square Aviation covered the other two aircraft However, in November 2020, Frontier filed a lawsuit against AMCK Aviation, arguing that the replacement agreements — including the one with CDB Aviation — were "much less favourable to Frontier" than the original framework agreement with AMCK; it alleged that the replacement agreements cost Frontier $53 million USD in 11 damages