Lessor BOC Aviation rides wave of industry expansion
Continuing sound fundamentals in the airline industry helped spur lessor BOC Aviation to an improved 2017 first-half result compared to the year-ago period.
The Singapore-based lessor turned in a 1H net profit of $240 million, up 13% year-over-year (YOY). Total revenues and other income rose 16% YOY to $670 million.
The company’s net book value of aircraft, including assets held for sale, increased 25% YOY to $12.1 billion. In the 2017 1H, the company also raised more than $1 billion in new financing.
As of June 30, BOC Aviation had a portfolio of 297 owned and managed aircraft, with an average aircraft age of 3.1 years and an average remaining lease term of 7.8 years for the owned aircraft fleet. It also had an orderbook of 196 aircraft scheduled for delivery over the period from July 1, 2017 to 2021. This figure includes all commitments to purchase aircraft, including those where an airline customer has the right to acquire the aircraft.
Over 2017 1H, BOC Aviation took delivery of 37 aircraft, including three acquired by airline customers on delivery.
“Our industry continues to be characterized by sound fundamentals, evident in the growth rate of passenger travel demand,” the company said in an operational commentary.
“IATA reported a 7.9% rise in RPKs in the first half of 2017—2% higher than the long-term rate of demand growth of 5%. IATA also recently lifted its global 2017 airline profit forecast by 6%, to $31.4 billion, driven primarily by this higher rate of demand growth, strong expected load factors and continuing low oil prices.
“Globally, airline load factors have also risen as capacity growth has been reined in by operator constraint and by delivery delays as airframe manufacturers adjust to shortages of interior components and issues with engines, especially for some new-technology aircraft. This includes two of our Airbus A320neo aircraft that were originally scheduled for delivery in Q4 2017 and will now be delivered in 2018,” the company said.
