Skip to content
AidData logo

Overview

CMB Financial Leasing enters into sale-and-leaseback agreement with airBaltic for four Airbus A220-300 aircraft

Commitment Year•2018Country 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 16, 2018
End (actual)
Nov 21, 2019

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

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

Receiving agencies

State-owned companies

  • AS Air Baltic Corporation (airBaltic)

Loan description

CMB Financial Leasing enters into sale-and-leaseback agreement with airBaltic for four Airbus A220-300 aircraft

Interest type•Unknown

Narrative

Full Description

Project narrative

On July 16, 2018, CMB Financial Leasing Co., Ltd. (CMBFL) — a Chinese state-owned leasing company wholly-owned by China Merchants Bank — signed a Letter of Intent for a sale-and-leaseback agreement with AS Air Baltic Corporation (airBaltic) — flag carrier of Latvia and, which was, at the time of the loan event, jointly owned by the Government of Latvia (80%) and German investor Ralf-Dieter Montag-Girmes (20%) — for four Airbus A220-300 aircraft. Then, on December 1, 2018, the agreement for the fourth plane closed. CMBFL would lease the four aircraft on operating leases to airBaltic. Industry reporting indicated that by or before November 21, 2019, all four CMBFL-leased aircraft were in service.

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. Skytech-AIC — a UK-based remarketing company — arranged the agreements.