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Aircraft lessor BOC Aviation says deliveries slipping due to manufacturer delays

Published 08/18/2022, 06:54 PM
Updated 08/18/2022, 06:55 PM
© Reuters. FILE PHOTO: BOC Aviation logo is seen displayed in this illustration taken, May 4, 2022. REUTERS/Dado Ruvic/Illustration
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(Reuters) - Asian aircraft lessor BOC Aviation Ltd said nine aircraft deliveries due in the first half had slipped into later periods because of manufacturer delays related to supply-chain and regulatory issues as well as labour shortages.

The lessor said client American Airlines (NASDAQ:AAL) Group Inc had received two Boeing (NYSE:BA) Co 787s this month, the first deliveries globally since May 2021 after the U.S. Federal Aviation Administration approved the resumption of deliveries following production problems.

BOC Aviation, which has a fleet of 390 owned planes, expects to receive seven more 787s this year, Chief Operating Officer David Walton told analysts on an earnings call on Thursday evening.

Other large lessors like AerCap Holdings NV and Air Lease (NYSE:AL) Corp have also reported airplane delivery delays.

BOC Aviation swung to a $313 million net loss in the first half, in line with guidance provided last month, due to the $518 million after-tax impact of writedowns of 17 aircraft that remain stuck in Russia.

More than 400 leased planes worth almost $10 billion remain in Russia after sanctions imposed after the invasion of Ukraine forced lessors to cancel their contracts with Russian airlines, which then declined to return most of the planes.

BOC Aviation said it had filed an insurance claim in June.

© Reuters. FILE PHOTO: BOC Aviation logo is seen displayed in this illustration taken, May 4, 2022. REUTERS/Dado Ruvic/Illustration

The lessor had held cash collateral representing 28% of the value of the planes that it was able to draw down when they were not returned, which Walton said he believed was the highest among its peer group.

"You'll tend to find that with emerging markets where we're concerned about the ability to repossess, then we will take more security," BOC Aviation Chief Executive Robert Martin said.

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