Narrative
Full Description
Project narrative
On October 20, 2023, 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 finance lease agreement worth an estimated $438 million USD with JetBlue Airways Corporation — a Delaware-incorporated American major airline headquartered in Long Island City, in Queens, New York City and traded on Nasdaq Stock Exchange — for two Airbus A320NEO and eight Airbus A220-300 aircraft. The leases were scheduled to close in 2023. This finance lease was secured by (i.e. collateralized against) the aircraft in question. The proceeds were to be used for aircraft purchase (finance leases often have provisions to purchase the aircraft at the end of the lease).
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. $438 million USD was assessed by industry media sources to be the value of this finance lease agreement. 3. Some media sources claim this was a sale-and-leaseback transaction, while BOC Aviation and other media sources state it was a finance lease, which AidData has assessed to be accurate.