UPDATE 1-TUI boosts finances with $226 mln sale and leaseback on 737 MAX jets
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LONDON, Aug 3 (Reuters) – Germany-based holiday company TUI said it agreed a sale and leaseback deal for five new Boeing 737 MAX-8 aircraft with BOC Aviation, raising $226 million to help boost its finances.
COVID-19 has wiped out air travel for Europeans for months, and now the threat of a resurgence in infections and new restrictions are causing more pain for airlines.
TUI has said it needs to cut 8,000 jobs and shed 30% of its costs to prepare for a smaller tourism market.
The company said on Monday that the sale and leaseback deal, which applies to aircraft it will receive next year, was part of its “asset right” approach to ownership and it expected further sale and leaseback financing on its deliveries beyond 2021.
The agreement was on standard commercial terms, said TUI, and would create a lifetime lease obligation of around 223 million euros to begin at the end of its 2021 financial year.
During what has become the travel sector’s deepest crisis, BOC Aviation has struck an estimated $5.5 billion in deals with carriers including Southwest and United Airlines to buy and lease back aircraft on what it says is more favourable pricing than would have been available in a stronger market.
The chief executive of BOC Aviation, which is based in Singapore and listed in Hong Kong, has said he remains confident in the 737 MAX plane which has been grounded for more than a year pending regulatory approval following two crashes.
Last week, the crisis for TUI deepened when it said its UK unit was forced to cancel thousands of holidays after Britain advised against travel to Spain, bringing back a 14-day quarantine rule for returning travellers just 15 days after dropping the requirement. (Reporting by Sarah Young; editing by Paul Sandle and Jason Neely)
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