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Overview

BOC Aviation enters into a $250 million USD lease with Finnair for six Airbus A321-200 aircraft

Commitments (Constant USD, 2023)$261,549,595
Commitment Year•2015Country of Activity•FinlandDirect Recipient Country of Incorporation•FinlandOverseas Jurisdiction•SingaporeSector•Transport And StorageFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Dec 1, 2015
Start (planned)
Jan 1, 2017
Start (actual)
Feb 24, 2017
End (planned)
Jan 1, 2018
End (actual)
Dec 29, 2017

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

  • BOC Aviation Limited

Receiving agencies

State-owned companies

  • Finnair Plc

Loan description

BOC Aviation enters into a $250 million USD lease with Finnair for six Airbus A321-200 aircraft

Interest type•UnknownMaturity•8 years

Narrative

Full Description

Project narrative

In December 2015, BOC Aviation Limited — a Chinese state-owned leasing company — entered into a Memorandum of Understanding (MoU) for an operating lease agreement with Finnair Plc — Finland's flag carrier airline that is publicly traded by majority-owned by the Finnish Prime Minister's Office — for four new Airbus A321-200 narrow-body aircraft. These aircraft were scheduled to be delivered to Finnair during the first half of 2017 on lease agreements with a minimum term of eight years. Then, in late January 2016, Finnair exercised an option under the MoU to lease two additional new Airbus A321-200 narrow-body aircraft. These aircraft were scheduled to be delivered to Finnair between the end of 2017 and the beginning of 2018 on operating lease agreements with a minimum term of eight years. The total value of the operating agreements was $250 million USD. Then, on or around February 24, 2017, BOC Aviation delivered the first of aircraft to Finnair, with the remaining to be delivered by the end of 2017. BOC Aviation delivered the second aircraft on March 21, 2017. BOC Aviation delivered the third aircraft on April 6, 2017. BOC Aviation delivered the fourth aircraft on May 9, 2017. BOC Aviation delivered the fifth aircraft on or around November 20, 2017. BOC Aviation delivered the sixth aircraft on December 29, 2017. In December 2023, Finnair purchased the six aircraft it was leasing from BOC Aviation for $200 million USD.

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.