Tianjin Bohai Leasing is taking over the leases on four Boeing 737s from Yangtze Leasing at a transfer price of CNY650 million ($94.5 million).
Tianjin Bohai is a wholly-owned subsidiary of Bohai Leasing. The transaction is reported as a related-party transaction, as HNA Capital Group is a controlling shareholder for both Bohai and Yangtze.
The transfer agreement spans three years, after which ownership will lie with Tianjin Changjiang No 4, the Yangtze SPV. It includes a “rental rate” of 8.5%, which both parties consider a fair market rate, and annual “rent” will be made at period end, Bohai says in a stock exchange disclosure.
The aircraft came from Yangtze’s order book and were committed to a 13-year lease since June 2012. The lease agreement is currently valued at $152 million, equivalent to CNY1.04 billion.
“The transaction will help Tianjin Bohai expand its leasing business and enhance the company’s future annual performance, with a positive impact on future profit,” Bohai says.
The latest transaction seems to follow other recent transfers of aircraft to Tianjin Bohai, and industry sources indicated the two companies may have merged.
Including this transfer, Bohai estimates that related-party transactions with Yangtze in 2019 does not exceed CNY1.54 billion.
According to Cirium's Fleets Analyzer, Tianjin Changjiang No 4 owns nine 787-800 aircraft, all operated by Hainan Airlines.