HSBC Wins Mandate for Air China Financing

Air China has awarded HSBC the sole mandate to provide lease financing for the delivery of 14 aircraft this year at a total cost of US$881 million, making this China’s biggest ever aircraft financing deal.

Air China is the largest and most profitable airline in China and is the only one that carries the flag  of the country.

The 10-year lease structure provides Air China with financing for 14 aircraft to be delivered in  2006 at a total cost of US$881 million.

“The mandate was won against intense international competition and reinforces HSBC’s strong  asset finance expertise,”said William Sheehan, managing director and head of Asset Finance,  Asia-Pacific for HSBC.

The aircraft to be leased are six Airbus A330-200 wide-body airliners, five narrow-body A319-  100 airliners and three narrow-body Boeing 737-700 airliners. They are all new aircraft.

“The deal reinforces the benefits of the focus we have applied to asset finance over the last 15  months,”said HSBC’s Sheehan. “It also completes a hat trick, with HSBC winning major  transactions from the three top Chinese airlines in this period.”

In April last year, HSBC provided US$84 million in financing to China Eastern Airlines to finance  two A320-200 airliners. It was the first ever aircraft financing for both the airline and HSBC to  go forward without state bank guarantees. Four months later, HSBC provided US$225 million in  financing to China Southern Airlines for the lease of five Airbus A319-100 airliners and one Airbus A320-200.

In addition, HSBC just closed its first aircraft operating lease transaction, providing one Airbus  A330-200 and two Airbus A330-300 airliners to China Eastern Airlines with total value of  US$302 million.  

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