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Aviation

CALC sees its CFR rating affirmed by Moody’s at Ba1; and IDR rating affirmed by Fitch at BB+

Author: Theodore Koumelis / Date: Wed, 07/06/2022 - 09:28
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Fitch recognizes the strategic importance of CALC’s operations to CEG and a high degree of strategic alignment with CEG.

Hong Kong - China Aircraft Leasing Group Holdings Limited ("CALC" or the “Company”, HKSE stock code: 01848; together with subsidiaries, the “Group”), a full value chain aircraft solutions provider for the global aviation industry, is pleased to announce that its corporate family rating (“CFR”) is affirmed by Moody’s Investor Service Pty Ltd (“Moody’s”) at Ba1 with a stable outlook; and its Long-Term Issuer Default Rating (“IDR”) is affirmed by Fitch Ratings (“Fitch”) at BB+ with a stable outlook. 
 
Moody’s advises in its credit opinion noting that despite the decline in the aviation sector resulting from the coronavirus pandemic, CALC’s performance and profitability in its core business are relatively stable, and are likely to improve with the recovery in the aviation industry. Moody’s affirmed that CALC’s 1) portfolio of young and narrow-body aircraft is conducive to mitigating risks; 2) good client base supports stable recurring profit and cash flow; 3) continuous liquidity support from China Everbright Group (“CEG”) and its affiliates helps reduce liquidity risk. In addition, Moody's also pointed out that CALC's exposure to Russian airlines is limited. Potential provisions or write-offs of related aircraft could have a negative impact in net profit in 2022, but will not significantly hurt the CALC’s operations and credit profile. 
 
Fitch recognizes the strategic importance of CALC’s operations to CEG and a high degree of strategic alignment with CEG. CEG has strong operational and managerial control over CALC with a record of providing funding and liquidity support. CALC is expected to receive continuous support from CEG and its affiliates, including China Everbright Bank Company Limited. Fitch affirms 1) CALC has a quality fleet focusing on in-demand fuel-efficient narrow-body aircraft, with 82% of its portfolio estimated to consist of Tier 1 assets, which can reduce asset-quality risk during downturns; 2) CALC has sufficient liquidity yet limited exposure to distressed airlines; 3) Profitability has improved with slightly lowered leverage in 2021. 
 
Mr. Mike Poon, CEO of CALC, commented: “CALC is pleased to have once again been recognized by the international rating agencies for its operating strength and premium credit profile. We believe these updates will help us reach a wider investor base and continue to improve our debt structure and lower our financing costs. With the accelerating revival of global aviation demand, CALC will tap into opportunities brought by the strong recovery of domestic and overseas markets; unleashing our full value chain aircraft asset management capabilities and dual-platform financing channels to continuously improve our profitability, and gradually reduce leverage in an effort to move closer to our set goals.” 
 
According to International Air Transport Association (IATA), the financial performance in all regions is expected to improve in 2022, benefiting from the accelerated recovery of the aviation industry, and the industry will fully recover with profitability on the horizon for 2023. Airbus also foresees demand for over 39,020 new passenger aircraft in the next 20 years in its market outlook. At the recent Farnborough International Air Show, Airbus announced its mega-order for 292 aircraft placed by four Chinese airlines, demonstrating the positive recovery momentum and prosperous prospects of the Chinese aviation market. 
 

ABOUT THE AUTHOR

Theodore Koumelis

Co-Founder & Managing Director

Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.