BOC Aviation has kicked off the new year with a heads-up to investors and analysts that its net profit for 2020 could be at least 25% down on the year prior.
In a profit warning issued today to the Hong Kong stock exchange, the Singapore-based lessor says it expects net profit after tax to be 25-30% lower than in 2019, in which it made a net profit of $702 million, up 13% on 2018.
BOC Aviation said in the 4 January exchange filing that it expects to incur provisions for “doubtful debts and impairment charges” for the year ended 31 December 2020, noting the “material adverse impact” of the Covid-19 pandemic and its related travel restrictions on its customers.
In 2020, many lessors were hit with high volumes of rental deferral requests from their airline customers whose operations were affected by the pandemic.
In the first six months of 2020, BOC Aviation’s profits remained steady. It registered a small year-on-year increase in its profits during that period, although its cash collection rate fell to the lowest level in more than a decade.