Narrative
Full Description
Project narrative
In February 2023, AVIC International Leasing Co., Ltd. (AVICL) — a Chinese state-owned leasing company wholly owned by Aviation Industry Corporation of China (AVIC) — entered into a sale-and-leaseback agreement worth an estimated $406 million USD with Wizz Air — an Hungarian ultra low-cost airliner — for seven 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. The specific aircraft were seven Airbus A321neo aircraft. The aircraft were scheduled to be delivered within a year. The first aircraft, powered by Pratt & Whitney GTF engines and the first A321neo to complete final assembly at Airbus's Tianjin factory and given to a non-Chinese operator, was delivered to AVIC Leasing on June 28, 2023.
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. $406 million USD was assessed by industry media sources to be the value of this sale-and-leaseback agreement.