ICBC Leasing pledges to provide $1 billion USD in financing facilities to AirAsia for the acquisition of Airbus A320 aircraft

On October 11, 2013, under the witness of Chinese President Xi Jinping and Prime Minister of Malaysia Datuk Seri Najib Tun Razak, ICBC Financial Leasing Co. Ltd (ICBC Leasing) signed a Memorandum of Agreement (MOA) for aircraft financing facilities worth $1 billion USD (RM3.18 billion MYR) with AirAsia, a Malaysian low-cost airline, in which ICBC Leasing or ICBC overseas subsidiaries would provide AirAsia with financial facilities to acquire Airbus A320 aircraft in the form of finance leases, commercial loans, or sale-and-leaseback agreements. The aircraft, numbering no fewer than 10, would be A320s assembled by Airbus (Tianjin) Final Assembly Co., Ltd.

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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.

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