A senior official at Ethiopian told The Reporter that the MoU relates only to Boeing aircrafts but in the future it can be extended to other fleet types. “The understanding is for 500 million dollars in financial facility. The loan negotiation will be the next stage,” the official said.
The senior official said that it was the first time that a Chinese bank had taken the lead in providing aircraft financing to Ethiopian. However, ICBC was already a junior loan partner in the B777-200LR freighter deal.
According to the MoU, ICBC Leasing will provide Ethiopian Airlines with financial support for its fleet expansion plan, including but not limited to B737 and B787 aircrafts in the form of finance lease, sale and lease back, commercial loans or operating lease from ICBC Leasing’s Boeing order.
Ethiopian said the MOU was one of the largest financial cooperation in the aviation industry between the two countries, which is an important step for China’s financial industry to go international.
“We are delighted to work with Ethiopian Airlines – the top leading operator in Africa, and to support its fleet expansion.” Chief Executive Officer of ICBC Leasing, Cong Lin, said “The MoU marks a significant milestone between China’s Lessors and African airlines, which will promote deep financial cooperation between China and Africa.”
ICBC Leasing, a wholly owned subsidiary of Industrial and Commercial Bank of China (ICBC), with a registered capital of 11 billion Yuan, was founded in November 2007. ICBC said it was the largest and the most innovative Lessor in China. With domestic and foreign assets of 200 billion Yuan as of the end of March 2014, it manages more than 380 aircraft, of which 168 were delivered to more than 50 domestic and foreign world-class airlines. ICBC Leasing claims to be the top aviation leasing company in China and one of the leading Lessors in the international aviation leasing market.
“We are pleased to have ICBC Leasing, a leading global leasing company, as a strategic partner.” Chief Executive Officer of Ethiopian Airlines, Tewolde Gebremariam, said. “The cooperation with ICBC Leasing and its parent company ICBC Bank, the largest commercial bank in the world, will support our Vision 2025 of fast, profitable and sustainable growth strategy. We look forward to a long-term and mutually beneficial partnership with ICBC.”
Chinese banks are financing the ongoing construction of Ethiopian’s five- star hotel and new maintenance hangar.
China is not known in the global aviation industry for manufacturing and supplying aircraft for international carriers. However, the introduction of a new regional jetliner by the Commercial Aircraft Corporation of China (COMAC) was a success.
In 2010, COMAC announced its plan to manufacture a narrow body aircraft with a seat capacity of 158-174. The regional aircraft – COMAC C919 – will be the largest commercial airliner designed and built in China. The aircraft is currently under development. Its first flight is expected to take place next year, with first deliveries scheduled for 2016.
So far COMAC has won 400 orders for the C919, the mainland’s largest locally produced aircraft intended to compete with the Boeing 737 and Airbus A320 narrow body jetliners. Aviation experts forecast that COMAC will be a strong competitor of Boeing and Airbus in 20 years’ time. According to aviation experts, COMAC’s immediate focus is on the domestic market in China but it could break the duopoly by Boeing and Airbus after 20 years.
Sources told The Reporter that COMAC has an interest in selling the C919 to Ethiopian. When asked if ICBC’s financing could be a sign of Ethiopian interest to buy Chinese made aircrafts, the senior executive said “this is purely a financial facility arrangement. Aircraft evaluation is done purely on technical consideration by experts, fitness for mission (meeting our network requirement) and fleet commonality for cost consideration.”
Established in 1945, Ethiopian is a national flag carrier that currently serves 80 international destinations across five continents with over 200 daily flights, and using the latest technology aircrafts including B777s and B787s.
ICBC Leasing is the largest bank in the world by total assets and market capitalization. It is one of China’s ‘Big Four’ state-owned commercial banks. It was founded as a limited company on January 1, 1984. As of March 2010, it has assets worth USD 1.9 trillion, with over 18,000 outlets including 106 overseas branches and agents globally. In 2013 and 2014, it ranked number 1 on Forbes Global 2000 list of World’s Biggest Public Companies, and number 1 in The Banker’s Top 1000 World Banks ranking – the first time ever for a Chinese bank.