Airlines are resuming regular payments of their previously deferred aircraft leasing payments in a signal of easing pressure and adjustment, according to Singapore-based leasing company BOC aviation.
Airlines around the world deferred repayments on aircraft from March, following the global outbreak of COVID-19 and the disastrous effect it had on the international aviation sector.
However, BOC Aviation chief executive Robert Martin informed Reuters that most of its clients have restarted repayments on their leased aircraft, following a series of repayment negotiations between the airlines and the lessor.
Martin noted that many larger airline markets, including in China and the US, have begun to recover from the pandemic-induced standstill, meaning that airlines have been able to begin repaying their debts.
“Already, we’ve been repaid a lot of the deferrals that were put in place,” he said.
Martin added: “Experienced airlines clearly moved very quickly to react to the situation. The guys at the other end of the spectrum tended to be the entrepreneur-led airlines with big orders in emerging markets, and some of those have still got to come to the table.”
Despite some ongoing repayment negotiations and deferrals, BOC Aviation reported a flat first-half net profit of US$323 million, as well as an 11 per cent jump in total revenue and other income.
The aircraft leasing company, which now holds a fleet of 571 planes, also committed to 66 ‘purchase and leaseback’ arrangements in the first half of 2020, which provided airline partners with immediate liquidity.
In response to COVID-19, the lessor also cancelled 30 orders to Boeing for its troubled 737 MAX, and deferred the delivery of an additional 57 Boeing aircraft until 2021-24.
Meanwhile, all aircraft to be delivered before 2023 are already placed with an airline.
However, BOC recorded a US$12 million asset impairment on five Boeing aircraft already delivered and the repossession of three other planes.
“Things generally are getting better,” Martin said.
“I judge that from our internal cash flows but there are specific situations that will need to be worked out in the second half.”
