BOC Aviation, Asia’s second biggest aircraft lessor, has announced net profit after tax of $587 million – a return on equity of 16.3% for the financial period ending 31 December 2017.
Its board has recommended a 64% increase on the total dividend awarded in 2016.
Robert Martin, MD and CEO, said, “BOC Aviation started its twenty-fifth year in its best condition ever.”
The company, which is based in Singapore but majority-owned by the Bank of China, grew its fleet of owned and managed aircraft by 74 to 318 at the end of last year. According to The Business Times: “Asian lessors are investing billions of dollars to expand in a sector that offers long-term and dollar-based revenue, underscoring the region’s importance to an industry that makes up about 40% of the world’s airline fleet.”
Although the company reported better-than-expected record net profit, Martin said growth would have been higher if engine delays had not led to late deliveries by both Airbus and Boeing. Nevertheless, he is forecasting similar growth this year, with 53 deliveries arranged and the rest expected from sale-and-leaseback deals with airlines.
“There is one question mark, and I’ll be frank, and that is just to do with will Airbus and Boeing deliver our aircraft on time because of the engine issues,” Martin told Reuters in a phone interview. He added: “What it means is for those aircraft delayed you lose the revenue from the original delivery date to when they are actually delivered. That is a frustration.”
Martin said A320neo and 737 MAX jets with CFM engines were being delivered five to six weeks behind schedule, while A320neos with Pratt & Whitney engines were three to four months behind schedule. Some A350s with Rolls-Royce engines that BOC had expected to receive last year were being delivered this year, he said.
Most of BOC Aviation’s aircraft are deployed with Asian airlines; Cathay Pacific Airways and Indonesia’s Lion Air Group and big customers. BOC Aviation’s net lease yield rose to 8.4 percent from 8.2 percent the prior year.
Watch FINN’s recent video interview with Robert Martin, BOC Aviation.