Singapore-headquartered aircraft operating leasing company BOC Aviation Limited has signed sale-and-leaseback agreements with InterGlobe Aviation Ltd-operated IndiGo for eight new Airbus A320neo aircraft.
A sale and leaseback or SLB is a financial transaction in which the owner (airline), sells the aircraft, and then takes it back on lease from the buyer (lessor). This kind of deal typically removes the aircraft, and its associated debt, from the carrier’s balance sheet.
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Most Indian airlines prefer to place huge aircraft orders with manufacturers like Boeing Co and Airbus SE, which are subsequently financed through sale and lease back (SLB) arrangements made with leasing companies.
"We are delighted to partner once again with IndiGo, India’s largest passenger airline, as we continue to support our airline customers to finance their aircraft deliveries," said Robert Martin, Managing Director and Chief Executive Officer, BOC Aviation.
“This incremental capital expenditure also reflects our disciplined investment strategy throughout the cycle, focused on building a portfolio of (the) latest technology aircraft," Martin added.
BOC Aviation and IndiGo didn't comment on the valuation of the deal.
IndiGo, one of the largest customers of Airbus SE worldwide, has placed orders for 100 A320ceo, 332 A320neo and 398 A321neo planes, according to data from the French aircraft manufacturers website. The airline has so far received 100 A320ceo, 120 A320neo and 30 A321neo planes. Most of the planes operated by the airline have been financed through SLB transactions.
“The addition of these eight A320NEO aircraft demonstrates our confidence in the future growth of the aviation market in India," said IndiGo's chief aircraft acquisition and financing officer Riyaz Peermohamed.
To attract foreign aircraft lessors to set shop in India, the Indian government has in the budget rolled out tax incentives for companies that are willing to set up shop at the International Financial Services Centre (IFSC) in Gift City (Gujarat).
Civil aviation secretary Pradeep Singh Kharola recently said Ireland-based Acumen Aviation, London-based Investec Aviation Finance, Mumbai based aviation consultancy and asset management firm Vman Aero, and private jet aggregator JetSetGo Aviation Services Private Limited, will be setting up shops at Gift city.
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