China Aircraft Leasing says 2016 profits likely to be up 60pc

PUBLISHED : Monday, 20 February, 2017, 10:46pm
UPDATED : Wednesday, 22 February, 2017, 2:57pm

China Aircraft Leasing Group (CALC), one of the country’s biggest aircraft lessors, said its net profits for 2016 would leap at least 60 per cent from a year earlier, as its business expansion pays off.

“The expected increase is mainly attributable to increase in lease income which resulted from continued expansion of the scale of aircraft leasing business and the gain from disposal of finance lease receivables,” the company said in a filing to the Hong Kong stock exchange.

CALC is 37 per cent held by state-owned investment conglomerate China Everbright Limited, while Hong Kong-based Friedmann Pacific Asset Management owns a 27 per cent stake. It was the first aircraft lessor listed in Hong Kong.

The market of aircraft leasing – where a company purchases planes at a price advantage from the manufacturers and rents them out to airlines, often on decade-long contracts – is gaining popularity with deep-pocketed Asian investors. That’s because the business offers steady returns and a lower risk compared with airlines.

In December, Cheung Kong Property Holdings, controlled by Asia’s second richest man Li Ka-shing, agreed to pay HK$7.6 billion to buy an aircraft leasing unit from CK Hutchison, another firm owned by Li, as the property giant looks to expand into new business areas.

CALC had 81 planes as of the end of December, leased mostly to mainland airlines including China Southern Airlines. The company planned to more than double the number to 173 by the end of 2020.

For the first half of last year, the Hong Kong-based firm’s net profits more than doubled to HK$1.027 billion(US$130 million).