Narrative
Full Description
Project narrative
On November 30, 2016, Wizz Air, an air service provider in Central and Eastern Europe, announced that it had concluded an operating lease deal with BOC Aviation Limited (BOC Aviation) as well as a sale and lease back deal with China's Bank of Communications and Financial Leasing (BoCom Leasing) for the financing of a total of ten new aircraft. The ten aircraft are valued at $1.1 billion total. József Váradi, Chief Executive Officer of Wizz Air, said: "With today’s announcement Wizz Air secures its fleet requirements until 2018 when Wizz’s fleet will reach a significant and important milestone of 100 aircraft, while increasing the capacity by more than 30% and reinforcing WIZZ’s position as the leading low cost carrier in Central and Eastern Europe." BoCom Leasing and Wizz Air have entered into an eight aircraft sale and lease back agreement for two A320-200 and six A321-200 aircraft. The lease terms are nine years and the planes will be delivered between September 2017 and June 2018 (#92000). BOC Aviation and Wizz Air‘s deal includes a new A321-200 and a new A320-200 aircraft (#92001). The aircraft will be delivered in January and June 2017 respectively.
Staff comments
1. Wizz Air is the largest budget airline in Central and Eastern Europe, operating its fleet of aircraft from 16 bases with more than 270 routes connecting 93 destinations across 32 countries. 2. AidData assumes that the November 30, 2016 agreements are capital lease agreements. 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. Sale and leaseback (or sale-leaseback) agreements are generally considered to be off-balance-sheet hybrid debt products.