BOC Aviation sees up to $1.4 billion rise in its portfolio in 2011

BOC Aviation, the aircraft financing unit of Bank of China, said on January 24 that it was looking to order more aircraft from manufacturers like Airbus and Boeing this year as the airline industry rebounds strongly from the economic downturn.
BOC Aviation CEO Robert Martin said the company, which owns and manages around $6.6 billion worth of aircraft assets, was aiming to grow the assets to $7.5-8.0 billion by the end of 2011.
"We could easily do $1 billion worth of purchase and lease back business this year if the opportunities are available," Martin, a 20-year industry veteran, said in an interview.
"We would also this year, review our own orders for 2012-2016. We want to have a pipeline of aircraft coming in to our portfolio and we will engage in some discussions with manufacturers over that issue," he added.
Martin, a former Aircraft Finance Director at HSBC Investment Bank in Hong Kong, said BOC Aviation has just started the research process for the aircraft procurement, which could last 6-9 months.
BOC Aviation is 100 percent owned by Bank of China, which bought the company in December 2006 for an enterprise value of $3.25 billion.
The company owns and manages 167 airplanes, mostly from the single-aisle Airbus A320 and Boeing 737 families, and has another 64 on order. More than 50 percent of its business comes from Asia Pacific clients.
The industry, which suffered a massive downturn during the global economic recession in 2009, is returning to recovery with industry association IATA forecasting a profit of $15.1 billion for 2010 and $9.1 billion for 2011, compared to a loss of $9.9 billion in 2009. "What we are seeing in the leasing industry, certainly the demand for new aircraft is significant, we are beginning to see forward orders for leased aircraft as well as aircraft from the manufacturer."
"The only thing tempering that is inflation and in particular the increase in fuel costs, and the question is will the airlines be able to pass through the fuel cost increases to the passengers," Martin said.