16 narrowbody aircraft
According to CH-Aviation, Air France is participating in a sale and leaseback agreement with global lessor FTAI Aviation. This agreement will cover a total of 16 Airbus narrowbody jets in possession of the French flag carrier.
According to a statement from the lessor, the transaction specifically covers six A319-100s and ten A318-100s (also known as the ‘baby bus’). All aircraft are powered by CFM International CFM56-5B engines.
Expected to close later this month, the deal sees an average lease duration of 34 months. The specific value of the contract was not disclosed. In total, Air France owns all of its 18 A318-100s. Additionally, the airline owns 20 of the 33 A319-100s in its fleet.
Who is FTAI Aviation?
FTAI Aviation owns and acquires jet engines and commercial aircraft. On their website, the company claims that its “flexible approach to leasing” allows them to “meet the operational and time-sensitive needs” of its lessees. The airline’s website also claims to work with 70 operators across 42 countries. It has a total asset value of $1.5 billion.
FTAI’s current portfolio includes the following types of aircraft:
- Boeing 737s (-700, -800, -900)
- Boeing 757-200
- Boeing 767-300ER
- The entire Airbus A320 Family range (A318, A319, A320, A321)
Sale and leaseback has become a familiar term amid this global crisis. We’ve seen other sale and leaseback deals take place already. The most recent deal before this was one between United Airlines and BOC Aviation. The deal includes six Boeing 787-9 aircraft and 16 Boeing 737 MAX 9. However, the length and value of the leasing term are unknown.
Additionally, Cathay Pacific announced nearly two months ago that it would sell six of its Boeing 777-300ER planes to BOC Aviation. The deal is set to be worth $703.8 million dollars.
While sale and leaseback ultimately mean a higher cost for the airline in the long-term, the true value of such an agreement is time. When an airline sells its most valuable assets to an aircraft lessor, it’s buying itself time to weather this difficult storm of financial uncertainty. With the funds raised, airlines can cover their operating costs in the short term. This includes maintenance on parked aircraft and administrative overhead.
Do you think we’ll see even more airlines engage in sale and leaseback of their fleets? Let us know who you think might be next and why by leaving a comment.
Simple Flying reached out to Air France requesting comment or statement on the matter. At the time of publication, however, no response was received. We will update this article if any new information comes in.