Skip to content
AidData logo

Overview

BOC Aviation enters into second tranche of sale-and-leaseback agreement with Southwest Airlines for five of ten Boeing 737-700 aircraft (Linked to Record ID#105781)

Commitments (Constant USD, 2023)$242,780,610
Commitment Year•2009Country of Activity•United StatesDirect Recipient Country of Incorporation•United StatesOverseas Jurisdiction•SingaporeSector•Transport And StorageFlow Type•Loan

Status

Project lifecycle

Implementation

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Jan 8, 2009
Last repayment (originally scheduled)
Jan 4, 2025

Geospatial footprint

Map overview

Visualizes the AidData-provided feature geometry for this project.

Loading map…

This sale-and-leaseback agreement supported the acquisition of five of ten Boeing 737-700 aircraft by Southwest Airlines, which is headquartered at 2702 Love Field Drive, Dallas, TX 75235. More detailed location can be found at https://www.openstreetmap.org/way/443160778.

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

Private Sector

  • Southwest Airlines Co.

Loan description

BOC Aviation enters into second tranche of sale-and-leaseback agreement with Southwest Airlines for five of ten Boeing 737-700 aircraft

Interest type•Variable Interest RateLoan tenor•6-month rateMaturity•16 years

Narrative

Full Description

Project narrative

In December 2008, BOC Aviation entered into a sale-and-leaseback, or purchase and leaseback (PLB), agreement with Southwest Airlines for ten Boeing 737-700 aircraft. The value of the agreement was approximately $350 million USD. The first tranche of five aircraft closed on December 23, 2008 (Record ID#105781). The tranche carried an interest of six-month LIBOR, resetting every six months, and was to be repaid in monthly installments of $7.8 million USD per month. The second tranche of five aircraft closed on January 8, 2009 (Record ID#105907). The aircraft were leased back on 16-year terms. Southwest was to pay monthly installments of $7.6 million USD, with an interest based off the January 5, 2009 six-month LIBOR. BOC Aviation and Southwest Airlines struck a second sale-and-leaseback agreement for six more Boeing 737-700 aircraft only four months later (Record ID#105780 and #105906).

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. The agreement was worth $350 million USD. AidData has assumed that each tranche of five aircraft each was worth $175 million USD.