European low-cost carrier Wizz Air and BOC Aviation signed a sale-and-leaseback agreement for six Airbus A321neo aircraft on May 8th. The Singapore-based lessor has signed multiple sale-and-leaseback agreements with airlines around the world since the onset of this crisis.
Sale-and-leaseback agreement with Wizz Air
The agreement with Wizz Air is for six A321neo aircraft scheduled to be delivered in 2020 and 2021. These fuel-efficient aircraft will be powered with Pratt & Whitney PW1100G-JM engines. The A321neos are in a single-class configuration with capacity for 239 passengers.
Wizz Air CEO, József Váradi, offered the following statement:
“We are delighted today to be signing yet another deal with BOC Aviation. The six new Airbus A321neo aircraft will expand our fleet and further strengthen our aim to fly the greenest and most efficient aircraft currently available. In these unprecedented times, Wizz Air is strongly committed to its aircraft order and today’s development reinforces our goal to stay the most efficient, most productive and financially one of the best-performing airlines in Europe.”
This agreement for six A321neos will give Wizz Air some cash to help support its current operations without hampering its expansion plans. While it does increase long-term costs, the short-term benefit outweighs the long-term– especially if travel starts to rebound quickly.
BOC Aviation already works with Wizz Air. The leasing company has placed Airbus A320s and A321s with the low-cost carrier.
Wizz Air aircraft orders
According to Airbus, Wizz Air has 65 A320neos and 211s A321neos on order. Of these, 8 A321neos have been delivered– the first of which arrived last year. Wizz Air has described these aircraft as “game-changing.” The planes offer outstanding economics and is at the top of the line when it comes to the largest-capacity narrowbodies in production.
Unlike other airlines, Wizz Air is still planning on maintaining a robust delivery schedule. This would keep the airline on track when it comes to its expansion plans. In addition, Wizz Air is already starting to see some sense of recovery. With capacity significantly down, Wizz Air is still selling about 75% of its seats. The CEO believes that young people are eager to get back in the air and start traveling again.
Moreover, the airline also sees an opportunity to expand in Gatwick. This comes as other airlines are pulling out of the London-area airport. At the same time, the carrier has already restarted operations at London-Luton airport.
One lessor that keeps popping up in this crisis is BOC Aviation. The company has already entered into agreements with United and Cathay Pacific. Recently, it was disclosed that BOC Aviation is also the company that Southwest Airlines signed a sale-and-leaseback agreement with for 20 Boeing 737s. The price on that deal was $815 million.
The lessor will emerge in good long-term standing with these deals. Wizz Air’s A321neos are brand new and will be around for years to come. As long as Wizz Air flies them, BOC Aviation will collect lease payments.
Wizz Air already owns over 50 Airbus A320neo aircraft with another 84 on order that will go out to other airlines. All of BOC Aviation’s aircraft scheduled to be delivered in 2020 will go out to airlines. However, these may end up being negotiated if airlines are not in a position to take new aircraft.
Do you think Wizz Air made a smart move? Let us know in the comments!