China’s civil aviation industry has seen a steady recovery since June. Meanwhile, with further easing of border restrictions in various countries, alongside the full rebound of the international aviation market, is leading to a strong recovery in global air travel demand and capacity.
Hong Kong- China Aircraft Leasing Group Holdings Limited (CALC) announced the Group’s unaudited interim results for the six months ended June 30, 2022.
- Steady business development – For the reporting 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), whose rental income reached HK$1,654 million, a strong growth of 43.1%.
- Adhering to prudent principles, the Company fully depreciated two aircraft that remained in Russia due to the Russian-Ukrainian conflict*. The Company’s loss attributable to shareholders for the reporting period amounted to HK$130 million (profit attributable to shareholders for HY2022: HK$303 million). If the write-offs were excluded, adjusted profit attributable to equity holders of the Company for the reporting period should have reached HK$309 million.
- The Board of Directors of the Company (the “Board”) has decided to declare the payment of an interim dividend of HK$0.15 per ordinary share (1H2021: HK$0.15), for a total of 112 million HK$.
- Maintain a portfolio of quality fleet assets – CALC added 11 aircraft from the end of 2021, resulting in a total fleet of 163 aircraft. As of June 30, 2022, 90% of the CALC-owned fleet by number of aircraft were highly liquid narrowbody models.
- Abundant liquidity – As of June 30, 2022, the Group had cash and bank balances of HK$4,879.7 million and unused 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 the rating of the CALC family of companies 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 reach
- During the Review Period, the Group delivered a total of 13 aircraft and sold 2 aircraft. 3 of the aircraft delivered were from the placement of the Group’s order book while 10 were completed under purchase and leaseback agreements. CALC’s fleet has thus increased by 11 aircraft from the end of 2021, i.e. a fleet of 163 aircraft as of June 30, 2022, including 138 owned aircraft and 25 managed aircraft. As of June 30, 2022, CALC had 241 aircraft on its order book, including 145 Airbus, 66 Boeing and 30 COMAC aircraft.
- CALC maintains a very liquid fleet of the most popular aircraft models. Like a
- As of June 30, 2022, 90% of the CALC-owned fleet by number of aircraft were narrow-body models, which were relatively less affected by the pandemic. The utilization rate of the fleet owned by CALC (with the exception of the two aircraft linked to Russian airlines) reached 100% as of June 30, 2022.
- As of June 30, 2022, 76.8% of the fleet owned by CALC, by number of aircraft, was leased to Chinese airlines (including Hong Kong, Macao and Taiwan), most of which are state-owned airlines with solid financial strength. All aircraft due for delivery in the next 16 months after June 30, 2022 have been mandated for leasing, more than half of which will be leased to foreign airline customers. As of June 30, 2022, aircraft owned and managed by CALC were leased to 38 airlines in 17 countries and regions.
Multiple funding channels provide sufficient liquidity
- During the reporting period, the total of new financing facilities secured and renewed facilities exceeded HK$14 billion, including aircraft project loans, PDP financings, working capital facilities , RMB bonds, etc., providing strong support for the Group’s business development. As of June 30, 2022, the Group had cash and bank balances amounting to HK$4,879.7 million (December 31, 2021: HK$5,013.6 million) and undrawn borrowing facilities amounting to HK$6,168.4 million (December 31, 2021: HK$3,117.0 million).
- The Group successfully issued RMB 1.2 billion of corporate bonds and RMB 1.5 billion of medium-term notes in China’s domestic market during the reporting period. The Group redeemed a US$300 million bond issue, RMB 1 billion ultra-short term debentures and RMB 1 billion corporate bond during the reporting period as they matured. deadline.
- During the reporting period, Moody’s affirmed CALC’s corporate family rating of Ba1 with a stable outlook, while Fitch affirmed CALC’s long-term issuer default rating of BB+ with a stable outlook, highlighting recognition by international rating agencies of CALC’s stable operations and strong credit profile.
Continue to build full value chain service capabilities
- During the reporting period, the Group’s associate company China Aviation Aftermarket Holdings Limited (“CAAM”) entered into agreements for the first time with Air China Limited and LATAM Airlines Group SA, respectively, on legacy aircraft transactions, helping both airlines retire 5 old aircraft and 6 airframes, respectively. In July 2022, the Group placed its first freighter conversion order, marking the start of its “passenger-to-cargo” (“P2F”) activity to maximize the residual value of aeronautical assets.
- FL ARI Aircraft Maintenance & Engineering Company Ltd (“FL ARI”) Group Joint Venture MRO Obtained Civil Aviation Administration of China Part 145 Approval Certification for Base Maintenance of B737NG Series Aircraft , further enhancing its commercial maintenance and repair capabilities.
Mr. Mike Poun, Executive Director and CEO of CALC, said: “China’s civil aviation industry has enjoyed a stable recovery since June. Meanwhile, with further easing of border restrictions in various countries, along with the full rebound of the international aviation market, leads to a strong recovery of global air travel demand and capacity.Industry projections have shown that international air travel will return to pre-pandemic levels in 2023. On the supply side, according to the latest market forecasts Next-generation passenger aircraft will represent more than 95% of the current fleet in service on the market by 2041. On the other hand, aircraft manufacturers are further reducing their capacity to production due to supply chain disruptions. The shortage of next-generation models, especially narrow-body models, is expected to further increase market value e of this asset class.
In the second half of the year, CALC will continue to strengthen its capabilities to manage the full aircraft value chain, leveraging its unique model of “new aircraft leasing + mid-size aircraft management to old” to proactively explore emerging airline business opportunities. accelerated fleet optimization and capacity expansion needs. With its premium assets, CALC is well positioned to benefit from the next bullish cycle in the industry in the post-pandemic period, creating better value for all stakeholders in society.