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Overview

CDB Aviation Leasing enters into sale-and-leaseback agreement with United Airlines Inc. for two new Boeing 737-MAX8 aircraft (Linked to Record ID#103224)

Commitment Year•2021Country of Activity•United StatesDirect Recipient Country of Incorporation•United StatesOverseas Jurisdiction•IrelandSector•Transport And StorageFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Jun 2, 2021
Start (actual)
Jan 4, 2022
End (actual)
Jan 4, 2022

Geospatial footprint

Map overview

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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

  • CDB Aviation Leasing

Receiving agencies

Private Sector

  • United Airlines, Inc.

Loan desecription

CDB Aviation Leasing enters into sale-and-leaseback agreement with United Airlines Inc. for two new Boeing 737-MAX8 aircraft

Interest type•Unknown

Narrative

Full Description

Project narrative

On September 22, 2020, CDB Aviation Lease Finance DAC (“CDBALF”) (CDB Aviation) — a Chinese state-owned leasing company wholly owned by the CDB Leasing — entered into a sale-and-leaseback agreement with United Airlines Inc.— one of the largest US-based Airlines — for 2 new Boeing 787-9 aircraft and 10 new Boeing 737-Max8 aircraft from Boeing. Each aircraft will be leased back by the Lessor (CDB Aviation) to United under an operating lease agreement upon delivery. The use of the proceeds of the sale-and-leaseback agreement were to be used by United Airlines for raising and maintaining liquidity purposes. On June 2, 2021, CDB Aviation and United entered into an amendment to purchase and leaseback 3 additional new Boeing 737-Max8 aircraft (See Record ID#103224). While the airplanes were scheduled to be delivered by 2021, they were eventually delivered on January 4, 2022. The two 787-9s are powered by General Electric GEnx engines and configured in a 257-seat layout with the new Polaris and Premium Plus cabins. As air travel returns, these wide-body aircraft are expected to deliver the advantages of lower fuel consumption and efficient economics to open new routes and markets. The thirteen 737 MAX 8 aircraft, powered by CFM International’s LEAP-1B engines, feature a total of 166 seats in a 2-cabin layout. The MAXs are operated on the carrier’s short- and medium-haul missions, delivering a reduced environmental impact and an enhanced passenger experience as United advances its long-term strategy to further entrench domestic operations.

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.