BOC Aviation leases 8 Boeing 777-300ER aircraft to Thai Airways

On October 22, 2010, Thai Airways International Public Co,. Ltd. (also known as Thai Airways International) and BOC Aviation Pte. Ltd. (BOCA) signed a Predelivery Commitment Agreement and Aircraft Lease Agreement. Under the terms of this agreement, BOCA announced that it would lease eight Boeing 777-300ER aircraft to Thai Airways International on a long-term basis. Boeing valued the orders at $2.2 billion at average list prices. The aircraft, powered by GE90-115BL engines, were originally expected to be delivered from August 2012 to October 2013. On October 24, 2013, BOCA delivered the last of the eight aircraft to Thai Airways. Then, during the first quarter of 2021, Thai Airways underwent a court-supervised restructuring to reduce debt and return to profit by raising fresh capital and it disputed around 192 billion baht ($6.3 billion) claimed by 48 lessors, including BOC Aviation. The disputed amount represented more than half of Thai Airways’ total liabilities of 410 billion baht. Yet an amicable settlement with creditors was key for the airline to stave off bankruptcy. The carrier required 30 billion baht by the middle of 2021 to resume its scheduled commercial services and pay for one-time employee separation costs. Thailand’s finance ministry, Thai Airways’ largest shareholder, backed the proposed restructuring, which also sought to impose a three-year freeze on debt repayments, a waiver of unpaid interest on loans, and the deferment of bond repayments for six years. Quarterly operating cash flow of Thai Airways International posted a record loss of $4.7 billion in 2020 after most of its services were halted by border closures due to Covid-19. Accumulated losses and mounting debt turned the airline’s equity negative, prompting the Thai bourse to suspend its shares from trading in February 2021. The stock of Thai Airways International fell 54% in 2020.

Additional details

1. Thai Airways International Public Co,. Ltd. (also known as Thai Airways International) is a national enterprise subordinated to the Ministry of Transport. It is a public company registered in The Securities Exchange of Thailand since 1991 with the Ministry of Finance as a dominance shareholder at more then 50%. 2. BOC Aviation Pte. Ltd. (or BOC Aviation) is a majority state-owned global aircraft operating leasing company and the largest aircraft operating leasing company headquartered in Asia. In December 2006, BOC Aviation was acquired by, and became a wholly-owned subsidiary of, Bank of China. Following the acquisition, the company's name was changed to BOC Aviation Pte. Ltd. in 2007. 3. 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. 4. On October 22, 2010, Thai Airways International Public Co,. Ltd. (also known as Thai Airways International) paid a commitment fee to BOC Aviation Pte. Ltd. (BOCA) according to the Predelivery Commitment Agreement and Aircraft Lease Agreement amount of $37.38 million or approximately THB 1,154.50 million

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