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Overview

BoComm Leasing enters into a sale-and-leaseback agreement with Frontier Airlines for one Airbus A320neo aircraft

Commitment Year•2019Country of Activity•United StatesDirect Recipient Country of Incorporation•United StatesSector•Transport And StorageFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Jan 1, 2019
Start (actual)
Nov 1, 2019
End (actual)
Nov 1, 2019

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Ultimate beneficial owners

At least 25% host country ownership

Funding agencies

State-owned Commercial Banks

  • China Bank of Communications Financial Leasing Co., Ltd. (BoCom Leasing)

Receiving agencies

Private Sector

  • Frontier Airlines, Inc.

Loan description

BoComm Leasing enters into a sale-and-leaseback agreement with Frontier Airlines for one Airbus A320neo aircraft

Interest type•Unknown

Narrative

Full Description

Project narrative

In 2019, Bank of Communications Financial Leasing Co., Ltd. (BoCom Leasing) entered into a sale-and-leaseback (SLB) agreement 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 one Airbus A320neo aircraft. This aircraft was a LEAP-1A equipped unit and had been ordered by Frontier in 2011. In November 2019, BoCom Leasing delivered the aircraft to Frontier. This was the first deal between BoCom Leasing and Frontier.

Staff comments

1. A lease is a contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an asset. The lessor is the legal owner of the asset, while the lessee obtains the right to use the asset in return for regular rental payments. Under a capital lease (a financial arrangement where the lessee/borrower uses an asset and pays regular installments plus interest to the lender/lessor), rental payments are usually classified as interest and obligation payments, similarly to a mortgage (with the interest calculated each rental period on the outstanding obligation balance). AidData codes capital leases as loans. 2. Sale and leaseback (or sale-leaseback) agreements are generally considered to be off-balance-sheet hybrid debt products.