BOC Aviation posts record profit of US$587m for 2017

Singapore

ASIA'S second-biggest aircraft lessor, BOC Aviation Ltd, posted a better than expected 40 per cent rise in full-year net profit on Wednesday as it benefited from higher lease revenue and US tax cuts.

The company, which is based in Singapore but majority-owned by Bank of China, reported a record net profit of US$587 million for the 12 months ended Dec 31, up from US$418 million a year ago, as it grew its fleet.

The result was 13 per cent higher than the average estimate of US$519.5 million of 10 analysts polled by Thomson Reuters I/B/E/S.

BOC Aviation in January had said its earnings would benefit by US$88 million to US$93 million due to US tax cuts.

"Our industry continues to exhibit good health, with stable borrowing costs, robust demand for new aircraft and strong underlying airline customer profits all contributing to the aircraft operating leasing sector's growth," BOC Aviation CEO Robert Martin said in a statement.

The company's net lease yield was relatively steady at 8.4 per cent, from 8.5 per cent as at June 30 as its fleet of owned and managed aircraft grew to 318 as at Dec 31 from 284 the previous year.

The 74 jets delivered in 2017 were the most delivered by Airbus SE and Boeing Co to any aircraft operating lessor last year, BOC Aviation said.

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 per cent of the world's airline fleet.

Analysts say a fall in aircraft leasing rates and tight returns for lessors highlight some of the challenges faced by an industry that has emerged as a significant new asset class in recent years.

The majority of BOC Aviation's aircraft are deployed with Asian airlines, with Cathay Pacific Airways Ltd and Indonesia's Lion Air Group among its main customers. REUTERS