Air India signs sale-and-lease-back deal with Willis Lease

22-09-2022

New Delhi, Sep 22 (UNI) Tata Group-owned Air India on Thursday said it has signed a sale and lease back deal with Willis Lease Finance Corp for 34 CFM56-5B engines installed on its Airbus A320 family fleet.

Under a sale and lease back financing model, an asset is sold to a leasing firm and then immediately leased back to the seller. This frees up capital for operations and transfer the residual value risk to the leasing company.

Air India in an official statement said that the engines will be covered under Willis Lease’s ConstantThrust program which will deliver significant reliability and cost savings versus a traditional MRO (maintenance, repair and overhaul) shop visit program.

Headquartered in Florida, US, Willis Lease is a leading global aviation finance company, specializing in the lease, finance and management of aircraft, spare commercial aircraft engines and auxiliary power units.

"Under the sale side of the transaction, Willis Lease will purchase from Air India 34 engines powering 13 Airbus A321 aircraft and 4 Airbus A320 aircraft.

"Through ConstantThrust, Willis Lease will provide replacement and standby spare engines, allowing Air India to avoid potentially costly and unpredictable shop visits on engines powering a transitioning aircraft fleet," Air India said.

Speaking on the agreement, CCO of Air India, Nipun Aggarwal said that the transaction with Willis Lease is very unique and landmark which will enable Air India to eliminate the maintenance burden and fully de-risk itself from the maintenance cost uncertainty associated with the engines which were not covered under any “Power By The Hour” program with the OEMs.

"This transaction will allow Air India to derisk itself operationally, improve fleet reliability, reduce cost, and optimize cash flows," he said.