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Overview

ICBC Leasing enters into a sale-and-leaseback agreement worth $288 million USD with Air France for two Airbus A350-900 aircraft

Commitments (Constant USD, 2023)$312,443,284
Commitment Year•2021Country of Activity•FranceDirect Recipient Country of Incorporation•FranceSector•Transport And StorageFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Apr 1, 2021
Start (actual)
Apr 8, 2021
End (actual)
Jul 16, 2021

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

  • ICBC Financial Leasing Co., Ltd. (ICBCFL) (ICBC Leasing)

Receiving agencies

Private Sector

  • Air France S.A.

Loan description

ICBC Leasing enters into a sale-and-leaseback agreement worth $288 million USD with Air France for two Airbus A350-900 aircraft

Interest type•Unknown

Narrative

Full Description

Project narrative

In or around April 2021, ICBC Financial Leasing Co., Ltd. (ICBCFL; ICBC Leasing) — a Chinese state-owned leasing company and wholly-owned subsidiary of the Industrial and Commercial Bank of China (ICBC) — entered into a sale-and-leaseback agreement worth an estimated $288 million USD with Air France S.A. — the flag carrier airline of France and France-incorporated wholly-subsidiary of Franco-Dutch Air France-KLM S.A. — for two Airbus A350-900 aircraft. This agreement was secured. The use of the proceeds of the sale-and-leaseback were to be used by the borrower for general corporate purposes. The first aircraft was delivered on or around April 8, 2021. The final aircraft was delivered prior to July 16, 2021. One of the aircraft was fueled by high-quality sustainable aviation fuel (SAF).

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. 3. $288 million USD was assessed by industry media sources to be the value of this sale-and-leaseback agreement. 4. AidData assesses the second aircraft was delivered prior to July 16, 2021 because Milbank issued a press release that suggested both aircraft were delivered. The specific delivery date is unknown, so for the time being AidData has coded July 16, 2021 as the actual_completion_date field and marked the actual_completion_date_estimated? field as True.