United Airlines has entered into an agreement to sell and lease 22 aircraft back to Bank of China Aviation, a statement released to the Hong Kong Stock Exchange from the aircraft company, disclosed.
The contract includes six Boeing 787-9 and 16 Boeing 737-9 MAX commercial planes, the United Airlines statement said.
The Singapore-headquartered BOC Aviation did not provide immediate details on the value of the transaction but said that the long-term deal involves leasing back the planes to United.
Last week, United Airlines said that as a result of the global health crisis, the company had cut its flight operations by 90 percent in May and plans to undertake similar reductions for the month of June.
The deal is expected to be approved any time in the coming months. As of March 31, 2020, the regional aircraft leasing BOC Aviation operates a fleet of 567 aircraft.
United Airlines flew fewer than 200,000 passengers in the first two weeks of April as a result of the disease-related lockdowns in several countries across the world, translating to a 97 percent decline from the more than 6 million passengers the airline transported in the same period last year.
The company has seen as much as 70 percent of its stock value disappear since the beginning of 2020. Its shares settled up 3.1 percent to close at $29.08 on Friday.
United's latest partnership with BOC Aviation allows the airline to save cash and give greater flexibility to its ledgers as it faces rising losses due to coronavirus that has triggered a worldwide dip in demand for air travel.
United Airlines chief executive officer Oscar Munoz said earlier this week activity has effectively sunk to zero. "We expect less passengers to travel in the month of May than we did in one day day in May last year," Munoz wrote to workers in a note detailing plans to slash its schedule by 90 percent in May.
The letter and warning came one day after the airline agreed to a US $4.9 billion payroll grant from the US Treasury. The airline further reported that there would be no involuntary furloughs or pay rate cuts for U.S. workers until at least September 30.
This month, Citigroup strategist Stephen Trent trimmed the price target for the U.S. airline from $87 to $51, but retained a Buy rating on its shares. Although Trent expects airline capacity to fall by a third year-on-year in the second quarter, he sees declines in demand as a result of the current crisis beginning to slow in the third quarter.
