Sunday, 19 April 2020

United Airlines agrees sale of 22 aircraft to BOC Aviation

The US mega carrier United has done a special sale and then lease back deal on 22 aircraft with BOC Aviation, part of the Bank of China.

United Airlines have sold BOC Aviation 16 Boeing 737 Max 9 aircraft and 6 of the larger 787-9 aircraft.  BOC would not confirm the total cost of the sale, but confirmed that it had purchased the aircraft and agreed on the terms for a long-term lease back to the American carrier.  

The transaction was completed on Friday and is part of BOC's special downturn plan in which it will be spending an additional US$5 billion buying aircraft from struggling airlines at lower than normal rates,  then leasing the aircraft either back to the airline it bought them from or to other clients.  In the last few weeks, BOC Aviation has done similar deals with American Airlines for 22 Boeing 787 aircraft and Hong Kong based Cathay Pacific for six of the carriers Boeing 777 planes.  

"If you're in any asset-based business, the best time to buy assets is during a downturn. And even better if you could get a 12-year lease with a top-tier credit with it as well." BOC's CEO Robert Martin recently said in an interview with S&P Global Market Intelligence.  "About half of our customers need a deferral and we have reasonable confidence that they can pay us back. What we're generally doing is a three-month deferral of around about half of the monthly rental that we want them to repay us over the summer high season, which for the northern hemisphere is July-August-September." 

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