BOC Aviation to buy five planes from Air China in lease-back deal

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Celia Chenin Shenzhen

Published: 6:43pm, 3 Oct 2016Updated: 9:48pm, 3 Oct 2016

Aircraft lessor BOC Aviation said on Monday it would purchase five new planes from Air China worth US$1.532 billion at list price and would lease them back to the carrier.

Asia’s largest aircraft lessor said the new planes encompass three Boeing B777-300ERs and two Airbus A330-300s. The aircraft are scheduled for delivery before year end.

“We are pleased to support Air China in its fleet growth and expansion plans in this transaction, which adds popular, in-demand aircraft on long-term leases to our portfolio,” said Robert Martin, chief executive officer of BOC Aviation. “This transaction also represents incremental capital expenditure in 2016, and we continue to focus on disciplined investing to grow our fleet in line with our current strategy.”

BOC Aviation chief executive Robert Martin at the BOC Aviation listing ceremony on June 1, 2016. Photo: Dickson Lee

Victor Au, chief operating officer at Delta Asia Financial said it is common for carriers to sell their planes and then lease them back in order to cut their debt ratios.

“The strong US dollar will increase financial pressure on these Chinese carriers as they usually issued dollar bonds to buy news planes,” said Au. “These carriers may tend to sell the planes and rent them back to release their debt pressure.”