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Overview

CMB Financial Leasing enters into a sale-and-leaseback agreement worth $240 million USD with Wizz Air for four Airbus A321neo aircraft

Commitments (Constant USD, 2023)$226,780,592
Commitment Year•2022Country of Activity•HungaryDirect Recipient Country of Incorporation•JerseySector•Transport And StorageFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Jul 10, 2022
Start (actual)
Aug 1, 2022
End (planned)
Dec 31, 2022
End (actual)
Jun 2, 2023

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 companies

  • CMB Financial Leasing Co., Ltd. (CMB Financial Leasing) (CMBF) (CMBFL)

Receiving agencies

Private Sector

  • Wizz Air

Loan description

CMB Financial Leasing enters into a sale-and-leaseback agreement worth $240 million USD with Wizz Air for four Airbus A321neo aircraft

Interest type•Unknown

Narrative

Full Description

Project narrative

On July 10, 2022, CMB Financial Leasing Co., Ltd. (CMBFL) — a Chinese state-owned leasing company wholly owned by China Merchants Bank — entered into a sale-and-leaseback agreement worth an estimated $240 million USD with Wizz Air — an Hungarian ultra low-cost airliner — for four Airbus A321neo aircraft. This agreement was secured (i.e. collateralized). The use of the proceeds of the sale-and-leaseback agreement were to be used by Wizz Air for general corporate purposes. Financial close was reached on June 2, 2023. The specific aircraft were four narrowbody Airbus A321neo aircraft. The aircraft were on operating leases. Two of the aircraft were under a lease term of eight years with a 24-month (two year) extension option and two were under a lease term of 12 years with a 12-month (one year) extension option. Two of the aircraft had been delivered soon before or in August 2022 and the other two were scheduled for delivery in the fourth quarter of 2022.

Staff comments

1. Wizz Air is the largest budget airline in Central and Eastern Europe, operating its fleet of aircraft from 16 bases with more than 270 routes connecting 93 destinations across 32 countries. 2. 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. 3. Sale and leaseback (or sale-leaseback) agreements are generally considered to be off-balance-sheet hybrid debt products. 4. $240 million USD was assessed by industry media sources to be the value of this sale-and-leaseback agreement. 5. AidData assumes the remaining aircraft were delivered as the transaction reached financial close in June 2023. For the time being, AidData has coded the financial close date as the actual_completion_date field and marked the commitment date as estimated.