Narrative
Full Description
Project narrative
In September 2010, partial close was reached on a deal in which ICBC Financial Leasing Co., Ltd. (ICBCFL) — 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 with Air Berlin PLC & Co. Luftverkehrs KG — a German airline, Germany's second largest, headquartered in Berlin — for two Airbus A319-100, two Airbus A320-2022, and four Boeing 737-800 aircraft (eight aircraft in total). The sale-and-leaseback agreement was a component of an approximately $700 million USD (€524 million EUR) deal between ICBCFL and Air Berlin for 18 aircraft (12 new, six used); the other 10 aircraft in the deal (four Boeing 737-800s and six Airbus A320-200s) were outright purchased by ICBCFL. The deal was partially closed in September 2010, with final execution (delivery) expected for 2011 and 2012, as a number of used and new aircraft involved had yet to be delivered.
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.