BOC Aviation Limited (8BO.F) Earnings Call Transcript & Summary

Good morning, shareholders and shareholders' representatives. My name is Juliana Zhang, and I'm the company secretary of BOC Aviation Limited. Welcome to the 2020 Annual General Meeting of BOC Aviation Limited. All the Directors of the company are present in the meeting. They are Chairman and Non-executive Director, Mr. Sun Yu; Vice Chairman and Executive Director, Madame Zhang Xiaolu; Executive Director, Mr. Robert Martin; Non-executive Directors, Mr. Li Mang, Mr. Liu Chenggang, Madame Zhu Lin; and Mr. Wang Zhiheng; and Independent Non-executive Directors; Mr. Fu Shula, Dr. Dai Deming; Mr. Anthony Tyler and Dr. Bernard Yeung. The company's senior management; the company's external auditor, Ernst & Young; legal adviser, Freshfields, share registrar; Computershare and corporate services adviser, Tricor, are also present in this meeting. To ensure that this meeting proceeds smoothly, I kindly request all participants to mute your lines. Thank you for your understanding and cooperation. Please note that this meeting will be recorded, and the video recording will be posted on our website. Please also note that all references to currency are to U.S. dollars, unless otherwise stated. Now I'd like to invite our Chairman, Mr. Sun Yu, to open this meeting.

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As this AGM is conducted by electronic means, the company requested shareholders to vote by submitting a proxy form appointing the Chairman of the meeting to act as your proxy. The Chairman of meeting will vote in accordance with your voting instructions as specified in the proxy form. If you did not specify your voting instructions in the proxy form, the Chairman of the meeting will exercise her discretion to vote. At the end of this meeting, the voting papers will be sent to Computershare, our Hong Kong share registrar, for tabulating the votes. The poll results will be published on the website of the company and the Hong Kong Stock Exchange later today after the market closes.

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Firstly, we are focused on the health and well-being of our employees. We're a small company in terms of headcount, with around 170 full-time employees in 5 locations around the world. Ensuring their safety is paramount to the continuation of our business and with our employees working from home in all of our locations, with the exception of Tianjin at the moment. Secondly, we're a long-term partner to our airline customers, and we're helping them in 2 main ways. For some airlines, we're helping build their liquidity through purchase and leaseback transactions, and we are adding good assets on long-term leases at the same time. For others where this is not an option, we're helping on a case-by-case basis, with rent deferral or similar agreements. Thirdly, we are very focused on maintaining a good liquidity position. As you all have seen, we have recently raised $1.75 billion of unsecured debt in the capital markets, and we have no significant remaining debt maturities left in 2020. One of the hallmarks of our business is that we carefully manage our debt repayment profile and maturity schedule to ensure our refinancing needs year-to-year are both conservative and manageable. Fourth, we have strong investment-grade ratings from Fitch Ratings and S&P Global Ratings, who have both reaffirmed their ratings since March 2020. Finally, we've designed the aircraft portfolio for resilience. Our fleet is one of the youngest and the most efficient in the industry, with a weighted average age of 3.4 years for the owned portfolio. We have long-term lease contracts in place, with a weighted average remaining lease term of the leases in the owned portfolio being 8.5 years, and we're very selective about our customer base.

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In any downturn, our investment aims are to use our access to liquidity to provide fleet and financing solutions to our airline partners, while at the same time, improving the quality of our portfolio and our customer mix as well as purchasing aircraft at attractive prices and subject to long-term leases. The current environment has given us the opportunity to do all of these things. We have committed CapEx for 2020 of $5 billion as at 11th of March 2020. And since then, we've announced additional investments. Our aircraft purchase so far in 2020 have all been of the latest technology, are committed for long lease terms for up to 16 years and have been purchased from 5 of the most respected airlines in the industry. These include Cathay Pacific, American Airlines, Wizz Air, United Airlines and most recently, Southwest Airlines, and they represent a global spread to our investment. The timing of these investments is also important as we now believe that the worst of the downturn in airline passenger traffic was recorded in April and early May.

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