Published on : Monday, April 20, 2020
American carrier United Airlines recently entered into a sale and leaseback agreement with Singapore-based aircraft leasing company BOC Aviation. United would include 22 of its aircraft in the leaseback plan. On Sunday, BOC Aviation announced that it will purchase those 22 aircraft from United. The same planes would be leased back to United later by the company later.
According to reports, the sale of 22 aircraft has been documented to the Hong Kong Stock Exchange on April 19. Around 6 Boeing 787-9 aircraft and 16 Boeing 737 MAX 9 has been included in the deal. United Airlines will be allowed to fly the aircraft as it entered on a long-term deal with BOC. This sale would allow United to conserve some cash which would be useful amidst the present crisis caused by the COVID-19 pandemic.
Most of these aircraft have been grounded due to the unprecedented situation. In addition, the airline’s international routes have also been significantly slashed in recent days. Therefore, despite a United States Treasure agreement for $5 billion, the carrier requires more ways to raise capital. Through the sale and leaseback arrangement, United can earn some much-needed cash as well as retain its aircraft for the future when they are ready to fly once again.
United Airlines is also given the allowance to customise the interior of these aircraft as and when required. As the 787-9s are set to undergo retrofits to include Premium Plus and Polaris, the permission would be incredibly useful. United will be receiving cash for short-term and also leasing installments in the long-term. Aircraft leasing enables airlines to acquire and operate new aircraft without requiring full payment of the aircraft upfront.
Passengers would not be directly impacted by the sale and leaseback agreement. The aircraft will continue to operate for United once the grounding is lifted, international routes start to open and the coronavirus crisis gets over.