Singapore’s BOC Aviation writes off 18 of its jets held hostage in Russia

BOC Aviation has written off 18 of its aircraft that are being held hostage in Russia, writing them off in their June 30 accounts.

Singapore’s BOC Aviation is the latest aircraft lessor to clear its books of aircraft stranded in Russia. The lessor wrote off $804 million for the aircraft, pushing it to a $313 million net loss for the six months ended June 30. Write-downs aside, BOC Aviation (BOC) had a successful first half of the year (1H 2022), with revenue up by 8% to $1.196 billion, compared to $1.11bn in 1H 2021.

BOC has nearly $6 billion of liquidity
Notably, lease rental revenue decreased from $927 million last year to $877mn in 1H 2022, which BOC said was due to “the termination of leases with Russian airlines of 18 owned aircraft and aircraft that were off lease.” BOC had 17 aircraft in Russia with a net book value of $804 million. While it has written off the $804 million, that has been partially offset by the group’s $223 million of cash collateral for those aircraft.

The lessor also recorded a tax credit of $63 million on the write-down, reducing its after-tax impact to $518 million. Its liquidity stands at a healthy $454 million in cash and short-term deposits, in addition to $5.5 billion in undrawn committed credit facilities as of June 30.

At the end of June, BOC had a portfolio of 608 owned, managed, and on-order aircraft. Its fleet has an average age of 4.1 years and an average remaining lease term of 8.4 years. Of the owned fleet of 390 airplanes, only eleven are not currently active, giving BOC a 96.1% utilization rate. The aircraft off-lease are five twin-aisle, eleven single-aisle, and one freighter aircraft. There are also four single-aisle aircraft off lease in the managed fleet of 37, although three are committed for lease.

The order book is 100% new-gen aircraft
BOC prides itself on having and acquiring new generation aircraft, with 69% of its owned fleet and 100% of ordered aircraft in that category. Out of the 608 owned, managed, or ordered aircraft, 344 are from Airbus, and 258 are from Boeing, with six freighters not identified by type.

Its owned or managed single-aisles include 208 A320-family and 136 B737-family planes, while its widebodies include 32 Boeing 777s, 20 787s, 16 Airbus A330s, and nine A350s. Looking at the 1H orders, BOC had committed to 111 A321neos, 49 737 MAXs, and 21 787s. Since June 30, it has canceled an order for three B787s and committed to buying six additional A320neo family aircraft, expected to be delivered in 2024.

During 1H, BOC Aviation received 20 aircraft, with five to be acquired by airline customers on delivery. It transitioned six used aircraft to new homes and sold five from its owned fleet, recording a $13 million gain from the sales. Forty-six new lease commitments were signed in the first half of 2002, with all aircraft scheduled for delivery from BOC’s order book before 2023 placed with airline customers.

The lessor has 79 customers in 36 countries, spread reasonably equally around the regions. As measured by aircraft net book value, BOC has 24% in Asia-Pacific, 20% in Europe, 17% in the Americas, and 12% in Africa. Its largest region is the combined group of China, Hong Kong, Macau, and Taiwan, with 27%. simpleflying.com