Narrative
Full Description
Project narrative
On April 17, 2020, BOC Aviation (USA) Corporation — a Nevada-incorporated wholly-owned subsidiary of BOC Aviation Limited, a Singapore-based Chinese state-owned leasing company — entered into a sale-and-leaseback agreement worth an estimated $1.1 billion USD with United Airlines, Inc. — a Delaware-incorporated, major American airline headquartered in Chicago, Illinois wholly-owned by United Airlines Holdings, Inc., a publicly traded airline holding company traded on the Nasdaq Stock Market — for six 787 twin-aisle aircraft and 16 737 Max single-aisle aircraft (22 total aircraft). The aircraft would be leased on operating leases. At least one plane in the lease carried a 12-year maturity. Financial close was achieved on February 10, 2021. BOC Aviation delivered the 16 737 MAX 9 aircraft to United Airlines in 2020 and 2021. One 787 aircraft has been delivered, and five 787-9 aircraft remain undelivered as of October 2024.
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. $1.1 billion USD was assessed by industry media sources to be the value of this sale-and-leaseback agreement. 4. At least one plane in the lease carried a 12-year maturity. AidData assumes all planes had similar terms and coded accordingly. This issue merits further investigation.