China’s civil aviation industry has seen stable recovery since June. Meanwhile, with further relaxation of border restrictions in various countries, alongside full rebound of the international aviation market, drives sharp recovery of global air travel demand and capacities.
Hong Kong – China Aircraft Leasing Group Holdings Limited (CALC) announced the Group’s unaudited interim results for the six months ended 30 June 2022.
- Steady business development – For the Review Period, the Group’s total revenue was HK$1,891 million, up 19.3% from the same period last year (1H2021 : HK$1,585 million ), of which lease income reached HK$1,654 million, representing a strong growth of 43.1%.
- Adhering to prudent principles, the Company wrote off in full of two aircraft that remain in Russia due to the Russia-Ukraine Conflict*. Loss attributable to shareholders of the Company for the Review Period was HK$130 million (profit attributable to shareholders for 1H2022: HK$303 million). If the write-offs were excluded, adjusted profit attributable to shareholders of the Company for the Review Period should have reached HK$309 million.
- The board of directors of the Company (the “Board”) has resolved to declare payment of an interim dividend of HK$ 0.15 per ordinary share (1H2021: HK$0.15), totaling HK$112 million.
- Maintaining quality fleet asset portfolio – CALC added 11 aircraft from the end of 2021, resulting in a fleet of 163 aircraft in total. As at 30 June 2022, 90% of CALC’s owned fleet by number of aircraft were highly-liquid narrowbody models.
- Abundant liquidity – As at 30 June 2022, the Group had cash and bank balances of HK$4,879.7 million and undrawn borrowing facilities amounting to HK$6,168.4 million.
- Recognized by international credit rating agencies – Moody’s Investors Service Co., Ltd. (“Moody’s”) and Fitch Ratings (“Fitch”) reaffirmed CALC’s Corporate Family Rating at Ba1; and Long-Term Issuer Default Rating at BB+, with stable outlook, respectively.
Steady expansion of highly-liquid fleet and continued acceleration of global outreach
- During the Review Period, the Group delivered a total of 13 aircraft and disposed of 2 aircraft. 3 of the aircraft delivered were from the Group’s orderbook placement while 10 were completed through purchase and leaseback arrangements. CALC’s fleet thus increased 11 aircraft from the end of 2021, resulting in a fleet of 163 aircraft as at 30 June 2022, including 138 owned aircraft and 25 managed aircraft. As at 30 June 2022, CALC had 241 aircraft on its orderbook, including 145 Airbus, 66 Boeing and 30 COMAC aircraft.
- CALC has been maintaining a highly liquid fleet consisting of most popular aircraft models. As at
- 30 June 2022, 90% of CALC ‘s owned fleet by number of aircraft were narrowbody models, which were relatively less affected by the Pandemic. The utilization rate of CALC’s owned fleet (except for the two aircraft related to Russian airlines) reached 100% as at 30 June 2022.
- As at 30 June 2022, 76.8% of CALC’s owned fleet, by number of aircraft, was leased to Chinese airlines (including Hong Kong, Macau and Taiwan), most of which are state-owned airlines with strong financial strengths. All aircraft to be delivered in the next 16 months after 30 June 2022 have been mandated for lease, of which more than half will be leased to overseas airline customers. As at 30 June 2022, CALC’s owned and managed aircraft were on lease to 38 airlines in 17 countries and regions.
Multiple financing channels provide sufficient liquidity
- During the Review Period, total new financing facilities obtained and renewed facilities exceeded HK$14 billion, including aircraft project loans, PDP financing, working capital facilities, RMB bonds, etc., providing strong support for the Group’s business development. As at 30 June 2022, the Group had cash and bank balances amounting to HK$4,879.7 million (31 December 2021: HK$5,013.6 million) and undrawn borrowing facilities amounting to HK$6,168.4 million (31 December 2021: HK$3,117.0 million).
- The Group managed to issue RMB1.2 billion corporate bonds and RMB1.5 billion medium-term notes in the Chinese domestic market during the Review Period. The Group repaid a US$300 million bond issue, a RMB1 billion super short-term debentures and a RMB1 billion corporate bond during the Review Period as they became mature.
- During the Review Period, Moody’s affirmed CALC’s Corporate Family Rating at Ba1 with stable outlook, while Fitch affirmed CALC’s Long-Term Issuer Default Rating at BB+ with stable outlook, underscoring the international rating agencies’ recognition of CALC’s stable operations and sound credit profile.
Continue to strengthen the full value-chain service capabilities
- During the Review Period, the Group’s associate company China Aviation Aftermarket Holdings Limited (“CAAM”) reached agreements for the first time with Air China Limited and LATAM Airlines Group SA, respectively, on old aircraft transactions, assisting the two airlines to retire 5 old aircraft and 6 airframes, respectively. In July 2022, the Group placed its first freighter conversion order, marking the beginning of its “passenger-to-freighter” (“P2F”) business to maximize residual value of the aircraft assets.
- The Group’s MRO joint venture FL ARI Aircraft Maintenance & Engineering Company Ltd (“FL ARI”) was granted Part 145 approval certification by Civil Aviation Administration of China for base maintenance of B737NG series aircraft, improving its maintenance and repair business capabilities further.
Mr. Mike Poon, Executive Director and Chief Executive Officer of CALC, said: “China’s civil aviation industry has seen stable recovery since June. Meanwhile, with further relaxation of border restrictions in various countries, alongside full rebound of the international aviation market, drives sharp recovery of global air travel demand and capacities. Industry projections showed that international air travel would return to pre-pandemic levels in 2023. On the supply side, according to Airbus’ latest Global Market Forecast, the new generation passenger aircraft will represent over 95% of the current fleet in service in the market by 2041. On the other hand, aircraft OEMs are further reducing production capacities due to supply chain disruptions. A shortage of next-generation models, especially narrow-body models, is expected to boost the market value of such asset class further.
In the second half of the year, CALC will continue to strengthen its aircraft full value-chain management capabilities, riding on its unique model of “new aircraft leasing + mid-to-old aircraft management” to proactively explore business opportunities emerging from airlines’ accelerated needs for fleet optimization and capacity expansion. With its premium assets, CALC is well-positioned to benefit from the next industry up-cycle in the post-pandemic period, creating better value for all stakeholders of the Company.”
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