Is BOC Aviation’s A350-1000 Sale-and-Leaseback with Philippine Airlines Reshaping Its Risk Profile (SEHK:2588)?

• The Board of Directors of BOC Aviation Limited announced that on 3 December 2025 it agreed to purchase two Airbus A350-1000 aircraft from Philippine Airlines and lease them back under long-term operating leases, with deliveries scheduled in 2025 and 2026.
• This sale-and-leaseback deal adds modern, long-haul aircraft to BOC Aviation’s portfolio and secures multi-year lease income from a key Asia-Pacific carrier.
• We’ll now explore how securing long-term A350-1000 leases with Philippine Airlines could influence BOC Aviation’s earnings visibility and risk profile.

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BOC Aviation Investment Narrative Recap

To own BOC Aviation, you need to believe that demand for leased, modern aircraft will broadly keep pace with the company’s large forward orderbook and balance sheet leverage. The Philippine Airlines A350-1000 sale-and-leaseback slightly strengthens near term earnings visibility, but it does not materially change the key short term catalyst, which remains execution on deploying committed capital at attractive lease yields, or the main risk around weaker airline demand and potential overcapacity in coming years.

This new A350-1000 transaction sits alongside BOC Aviation’s recent H1 2025 results, where the company reported US$1,241.86 million in revenue and US$341.5 million in net income. Together, they highlight how fresh long haul aircraft leases and the existing earning base interact with a sizeable US$20 billion orderbook, reinforcing both the opportunity to compound lease income over time and the exposure to airline counterparty and demand risks across the cycle.

Yet for all the appeal of long term leases, investors should be aware of how quickly airline demand can shift if...

Read the full narrative on BOC Aviation (it's free!)

BOC Aviation’s narrative projects $3.0 billion revenue and $866.5 million earnings by 2028. This requires 10.7% yearly revenue growth and an earnings increase of about $61 million from $805.1 million today.

Uncover how BOC Aviation's forecasts yield a HK$85.00 fair value, a 16% upside to its current price.

Exploring Other Perspectives

Two Simply Wall St Community fair value estimates cluster between HK$85.00 and HK$103.34, underlining how far apart views on BOC Aviation’s worth can be. Against that backdrop, the company’s growing orderbook and dependence on sustained airline demand growth take on added importance for anyone weighing its future earnings resilience.

Explore 2 other fair value estimates on BOC Aviation - why the stock might be worth as much as 41% more than the current price!

Build Your Own BOC Aviation Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your BOC Aviation research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.
• Our free BOC Aviation research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate BOC Aviation's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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