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Overview

CDB Aviation provides $192 million to Volaris for sale and lease back of four A320neo aircraft

Commitments (Constant USD, 2023)$177,051,194
Commitment Year•2021Country of Activity•MexicoDirect Recipient Country of Incorporation•MexicoOverseas Jurisdiction•IrelandSector•Transport And StorageFlow Type•Loan

Status

Project lifecycle

Implementation

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Aug 1, 2021

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

  • Concesionaria Vuela Compañía de Aviación S.A.B. de C.V. (Volaris)

Loan description

CDB Aviation provides $192 million to Volaris for sale and lease back of four A320neo aircraft

Interest type•Unknown

Narrative

Full Description

Project narrative

In August 2021, CDB Aviation and Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (Volaris) — an ultra-low-cost Mexican carrier, with point-to-point operations, serving Mexico, the United States, Central, and South America — entered into a $192 million sale and leaseback agreement for the sale and lease back of four A320neo aircraft. Two of the aircraft were scheduled for delivery to Volaris by October 2021, with the remaining two expected to arrive by May 2022, bringing the total of CDB Aviation aircraft on lease to the Volaris to 6.

Staff comments

1. Sale and leaseback (or sale-leaseback) agreements are generally considered to be off-balance-sheet hybrid debt products. 2. 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. 3. CDB Aviation is a wholly owned Irish subsidiary of China Development Bank Financial Leasing Co., Limited (CDB Leasing).