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Overview

CMB Financial Leasing enters into sale-and-leaseback agreement with Smartlynx for two Airbus A320 aircraft

Commitment Year•2022Country of Activity•LatviaDirect Recipient Country of Incorporation•LatviaSector•Transport And StorageFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Jul 1, 2022
Start (actual)
Jul 1, 2022
End (actual)
Jul 1, 2022

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Funding agencies

State-owned companies

  • CMB Financial Leasing Co., Ltd. (CMB Financial Leasing) (CMBF) (CMBFL)

Receiving agencies

Private Sector

  • SmartLynx Airlines Limited (formerly LatCharter)

Loan description

CMB Financial Leasing enters into sale-and-leaseback agreement with Smartlynx for two Airbus A320 aircraft

Interest type•Unknown

Narrative

Full Description

Project narrative

In or around July 2022, CMB Financial Leasing Co., Ltd. (CMBFL) — a Chinese state-owned leasing company wholly owned by China Merchants Bank — entered into a sale-and-leaseback agreement with Smartlynx Airlines Limited — a Latvia-base charter airline, cargo operator, and aircraft lessor — for two Airbus A320 aircraft. The two A320 aircraft were manufactured in 2014, but CMBFL repossessed the aircraft from South African Airways (SAA) amid the COVID-19 pandemic. The aircraft feature IAE V2527-A5 engines. This transaction marked the first such agreement between CMBFL and Smartlynx.

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.