airBaltic signs leaseback deal with Chinese bank

Latvian airline airBaltic has announced it used the recent Farnborough Air Show in the United Kingdom to sign a leasing deal with a Chinese financial institution.

CMB Financial Leasing Co., Ltd. and airBaltic signed a Letter of Intent July 16 for the "sale and leaseback" of four Airbus A220-300 aircraft - until this month known as the Bombardier C Series. 

On July 1, 2018 European plane maker Airbus announced that it had entered into an agreement to acquire a majority stake in the Canadian aircraft manufacturer Bombardier's C-Series aircraft program. Under the agreement, Airbus will take 50.01% stake in the entity C Series Aircraft Limited Partnership (CSALP), with the remaining shares taken by Bombardier and Quebec Investment Corporation (IQ), respectively, at approximately 34% and 16%.

The financial details of the leasing arrangement were not specified. However, sale and leaseback deals are often used to remove expensive assets from a company's balance sheet and thus improve liquidity while still retaining use of that asset.

Founded in April 2008, CMB Leasing, as the leasing arm of China Merchants Bank (5th largest
bank in China) is one of the first five financial leasing companies approved by China Banking
Regulatory Commission with total assets of more than $24.6 billion. CMB Leasing is dedicated
to provide financial solutions for aviation, shipping, equipment manufacturing, energy and
environmental protection industries in the past 10 years. Aviation is one of its core businesses, according to an airBaltic release.

airBaltic currently has 9 C-Series/A220-300, aircraft on its fleet and as recently reported by LSM has committed to massive investment in Bombardier planes, with leasing agreements understood to be part of the means of achieving this goal.

The agreement also coincides with recent speculation about the possibility of direct flights taking off from Latvia to China in the near future.
 

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