Summary
- Frontier Airlines has signed a sale and leaseback agreement with BOC Aviation for 15 A320 neo aircraft.
- Sale & Leaseback increases liquidity and reduces operating costs for airlines.
- Frontier Airlines is adjusting its future fleet by postponing deliveries, canceling orders and replacing aircraft.
American low-cost carrier Frontier Airlines has entered into a sale and leaseback agreement with BOC Aviation. The agreement covers 15 of the airline’s Airbus A320 neo aircraft, which are scheduled to be delivered between 2025 and 2026. This move will enable the airline to strengthen its liquidity while expanding its network and operations.
Long-standing customer
American carrier Border airlines has announced that the airline has entered into a sale and leaseback agreement with the Singapore leasing company – BOC Aviation According to reports from FlightGlobal, the agreement will include 15 Airbus A320neo aircraft to be delivered to the airline in 2025 and 2026.
By entering into such an agreement, the airline will not only be able to maintain its liquidity but also sustainably grow its operations and fleet for the future. As the airline is a long-standing customer of BOC Aviation, the partnership was the obvious choice when the airline needed to enter into such an agreement.
Photo: Vincenzo Pace | Easy flying
The airline is the largest operator of the A320neo aircraft in the United States and data shows that Frontier Airlines has ordered 197 A320neo family aircraft, with delivery now scheduled through 2031.
What is sale and leaseback?
Sale and leaseback is essentially the practice whereby the airline sells the aircraft currently in its fleet or those scheduled to be delivered to the airline “on paper” to a leasing company of its choice, which then leases the aircraft back to the airline itself. This essentially results in the aircraft continuing to be operated by the airline, but there is a change in ownership.
This is a particularly useful move for an airline that wants to increase its liquidity without losing access to its aircraft or related operations. In fact, several airlines entered into such agreements during the height of the COVID-19 pandemic, allowing the airlines to reduce their financial burden while maintaining their fleet.
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Photo: Markus Mainka | Shutterstock
By entering into sale-and-leaseback agreements with lessors, the airline not only increases its available liquidity but also fundamentally reduces its operating costs, giving itself some breathing room when needed.
Changes to Frontier’s future fleet
The airline recently released its financial results for the second quarter and first half of 2024. While the airline posted a small profit during this period, its revenue has declined compared to the same period in 2023. For this reason, the airline has recently made some changes to its future fleet.
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Frontier Airlines reports $973 million in second quarter revenue and swaps Airbus A321XLRs for A321neos
Frontier Airlines ordered 18 Airbus A321XLRs in June 2019.
While the airline has entered into a sale and leaseback agreement for 15 A320s to be delivered over the next two years, the airline has also postponed the delivery of some aircraft that were due to be delivered during this period. In addition, the airline has cancelled its order for 18 Airbus A321XLR aircraft while it is converting 18 of its A320neo jets into the larger A321neo jets.
Photo: Vincenzo Pace | Easy flying
While the airline has slowed its fleet expansion, Frontier has also reduced its route network, eliminating over 40 routes. The airline says it will evaluate these routes and reinstate services in 2025 based on available capacity and travel season to better optimize the airline’s performance.
