Europe: Lufthansa Group Concludes Sale And Leaseback Of Twelve Short-haul Aircraft

The Lufthansa Group has entered into an agreement for a sale and leaseback of twelve short-haul aircraft. The transaction reflects the Group’s strategy to finance investments in new aircraft through a mix of cash, Japanese Operating Leases (JOLCOs) and operating leases. The sale and leaseback supports the modernization of the fleet of the Lufthansa Group Airlines. New and modern aircraft lower fuel consumption, reduce emissions, and improve ex fuel unit costs.

The transactions were executed with two counterparties, Clover Aviation Capital and long-term business partner BBAM (Babcock & Brown Aircraft Management), for the sale and leaseback of twelve Airbus A320 family aircraft at favorable commercial terms. The aircraft are up to two years old and are currently operated by Lufthansa Airlines, Lufthansa CityLine and Eurowings. The sale generates proceeds of c. EUR 600 million in the fourth quarter of 2023. The aircraft are leased back for a term of 72 months. The resulting lease obligation is recognized as debt under IFRS 16 and amounts to c. EUR 200 million. A book gain of c. EUR 100 million resulting from the sale will be recognized in EBIT. The book gain will not be included in Adjusted EBIT.

The transaction was already included in Lufthansa Group’s financial outlook, which assumes net capex to amount between EUR 2.5 and 3 billion in 2023.

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