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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, welcome to the investor call for BOC Aviation Limited's First Half 2022 Results Conference Call. I will now hand the session to Mr. Timothy Ross to begin today's presentation. Mr. Ross, please go ahead.
Thank you, operator, and welcome, everybody, to BOC's call to discuss our interim results for the 6 months ended 30th of June 2022. With me today are our Managing Director and Chief Executive Officer, Robert Martin; our Deputy Managing Director and Chief Financial Officer, Steven Townend; and our Deputy Managing Director and Chief Operating Officer, David Walton. Please note that some of the information you'll hear during our discussion today may consist of forward-looking statements, which are subject to risks and uncertainties that may cause actual results to differ materially from statements made today. You should not place undue reliance on any forward-looking statements, and you should review our results announcements for full details. Please also note that all currency references in today's call are in U.S. dollars.
A copy of our earnings announcement is available both via the Hong Kong Stock Exchange and in the Investors section of our website at www.bocaviation.com, and a conference call presentation is also available in the Investors section of our website. This call is being recorded and will be available for replay from our website within the next 24 hours, as is a transcript of today's discussion. I'll now turn over the call to Robert Martin for his comments.
Thanks, Tim, and good evening to everyone on the line. Thank you for joining us for our 2022 interim results earnings call. We reported a net loss after tax of $313 million for the first half of 2022 at the better end of the range that we provided at the beginning of July and equivalent to a loss per share of $0.45 compared with a net profit after tax of $254 million in first half 2021. Net assets per share as at the end of June were $7.09. Loss was caused by the write-down of the net book value of the 17 aircraft that remain in Russia, as detailed in our profit warning, and contributed a net after-tax charge of $518 million. Absent the effects of the write-down, our net profit after tax was $206 million, which we will describe as our core net profit after tax. Board has declared an interim dividend of $0.0889 per share, payable to shareholders of record on 30th of September. The dividend represents a payout ratio of 30% of the core net profit after tax. Decision to pay a dividend, despite recording a loss for the first half, reflects the one-off nature of this charge and the company's strong cash flow generation, robust liquidity position, and the Board's confidence in its outlook. Total revenues and other income increased 8% to $1.2 billion for the first half of 2022, ended the period with total assets at $23 billion. In April, we placed a landmark order with Airbus for 80 A320NEO family aircraft, the largest in our company's history and one that ensures a strong future delivery pipeline. Today, we have committed CapEx of $9.3 billion and we aim to augment this with additional aircraft investment. The external environment has been broadly driven by 3 themes in the first half covering, first, demand for travel; second, supply side issues for airlines and aircraft manufacturers, driving wage inflation and delays; and third, the ever-changing role of governments impacting our industry. First, the demand environment for our airlines across most of the world has significantly improved, with China and Japan lagging the rest of the market. Rising levels of passenger traffic and a strong fare setting environment are allowing airlines, particularly in North America, the Middle East and parts of Europe, to offset the impact of higher jet fuel costs, wages and interest rates to report better earnings. In recent results announcement, a number of U.S. carriers, including the big 4, have reported record second quarter revenues eclipsing even 2019 levels. Others, such as our largest customer, Qatar Airways, have announced record profit supported by a recovery in business class demand and a cargo market that remains substantially ahead of 2019 revenue contribution levels. This is evidenced in the data provided by the International Air Transport Association, which recorded an 83% rise in total passenger demand for the first half of 2022 compared with the first half last year and total global passenger traffic is now at 71% of 2019's levels. Significantly, all of this recovery has been achieved with limited contribution from China, the world's second largest passenger market, whose borders remain largely closed to international travelers and where domestic activity remained volatile during the first half. However, we know that China has great potential. In 2019, China recorded 74 million international passenger journeys. In 2021, that number was less than 1.5 million. We are confident of a rapid recovery in Chinese outbound travel as border controls are relaxed, which then should ripple across Asia, the Pacific and to Europe. Second, supply side challenges remain widespread in the aviation industry today. There are broadly 2 types: one, hitting the airlines themselves, where due to the rapid ramp-up of demand, airlines, airports and air-traffic control authorities are having labor difficulties as they gear up skilled workforces and face wage inflation in doing that. This is one of the greatest obstacles to the full return of air traffic to 2019 levels. Second is at the aircraft supply chain hitting timely deliveries of aircraft with delays in engines, parts and shortages of labor. In reflection of this, airframe manufacturers have modified their production targets, especially for the single aisle aircraft that dominate their skylines. Airbus has extended by 6 months, the time frame for its production ramp-up of the A320NEO family from 45 to 65 to the first quarter of 2024. Boeing currently produces 31 737 MAX family aircraft a month, but has delayed to an unspecified future date previously announced increases to 47 deliveries a month. Our capital expenditure in the first half continued to be frustrated by these manufacturer delivery delays. These resulted in the slippage of 9 aircraft deliveries into later periods that were originally scheduled for delivery in the first half, as supply chain and regulatory issues hampered manufacturer production and delivery. On a positive note, the 787 is delivering again as we took the first on 10th of August, with a second on 15th of August, both then delivered to American Airlines. These aircraft are the fifth and sixth deliveries in our 22 aircraft transaction. Third, we yet again encountered the impact of governments, both positive and negative, on our industry in the first half. We were pleased to see the rolling back of border controls and regulations on testing procedures for travel. This accounts for the optimism noted in my demand section above. We very much appreciate that the Singapore Government renewed the Aircraft Leasing Incentive Scheme by another 5 years and thank the Economic Development Board for its support. Russia-Ukraine situation produced a flurry of controls in the form of different sanctions from multiple governments. These sanctions were rushed through approval by governments, particularly in the EU and U.K. These have impacted both lessors and our insurers and will keep lawyers busy for many years. This may require a complete rethinking of aviation insurance. David will speak about our own insurance situation shortly. At the Board level, we welcome 2 new directors, Mr. Dong Zonglin and Mdm. Chen Jing; and thank Mr. Liu Chenggang and Mdm. Zhu Lin, who left the Board, for their contributions. I'll now hand over the call to David to speak to our operations and business development and then Steven will take over for a more detailed review of our P&L, cash flow and balance sheet.
Thank you, Robert. During the first half of this year, the world's aviation sector continued to build momentum and this was evident in our own activity levels. We executed 168 transactions covering the purchasing, leasing, transitioning and selling of aircraft. This was more than double the activity level of the first half of 2021 and we see this sustaining into the second half of this year. We delivered 20 new aircraft to airline customers during the first half of 2022, of which 5 were purchased by the customer at delivery, giving us 15 net new aircraft deliveries onto the balance sheet. Of these 15 deliveries, 10 were from our manufacturer order book. Our total fleet stood at 608 aircraft as at the end of June, comprising 390 owned and 37 managed aircraft, with an order book of 181 aircraft. Airline customers taking delivery in the first half of the year included Turkish Airlines, Flair Airlines, Azul Brazilian Airlines and Scoot, a Singapore Airlines' subsidiary. Robert indicated earlier, our CapEx has been constrained by manufacturer delays, however, we were pleased to see the restart of the Boeing 787 aircraft deliveries. We've now taken the first 2 of 9 787s that we expect to deliver over the balance of this year. Investor demand for aircraft with leases attached remained solid in the first half of 2022, during which we sold 5 aircraft from the owned fleet. We continue to build the CapEx pipeline, as demonstrated not just by our 80 A320NEO family order, but by the recently signed purchase and lease transaction for 6 A320NEO aircraft with JetSmart, an Indigo Partners portfolio company based in South America. During the first half, we transitioned 6 used aircraft to airline customers, with our aircraft utilization rate of 96.1% impacted by the number of aircraft in transition maintenance during the period. Weighted average age of our owned portfolio was 4.1 years at the end of June and our fleet remains one of the youngest in the airline operating leasing industry. We also continue to have one of the industry's longest weighted average remaining lease terms for our owned portfolio, at 8.4 years at the end of the first half 2022. No operational review of the first half of 2022 would be complete without some discussion of the impact that the conflict between Russia and Ukraine has had on our business. At the outset of hostilities, we had 18 aircraft in the owned fleet and 3 in the managed fleet on lease to Russian airlines. By the time that government sanctions on leases to Russia went into effect at the end of March and all foreign lessors were obliged to terminate leases to Russian airlines, we had repossessed 1 owned and 2 managed aircraft. These 3 aircraft are now placed with airline customers. We also successfully drew 100% of the letters of credit that we held as collateral, contributing to the $223 million in cash collateral that we were able to offset against the write-down of net book value of the owned aircraft that remained in Russia at 30 June. The cash collateral we held represented 28% of the net book value of those aircraft, which we believe was the highest cash recovery against Russia-related write-downs for our peer group. We filed insurance claims on the relevant policies in order to recover our losses and we intend to continue to vigorously pursue those claims. As we're sure you'll understand, this is a complex and sensitive matter and we won't be able to comment further on it for the time being. Turning to ESG, we continue to work to achieve our targets, which include reducing our energy usage, direct carbon emissions and waste. Portion of our owned fleet that is latest technology continues to rise, increasing to 69% by aircraft net book value, and all future orders are latest technology as well. During the first half, we moved our Singapore head office into new premises accredited Green Mark Platinum by the Singapore Building and Construction Authority. This will positively impact our direct carbon emissions and already provides an enhanced working environment for our employees. Elsewhere, we continued to contribute positively to our local communities. In Singapore, we cleared litter from rivers and coastlines, donated toys and packed food parcels for needy families, while colleagues in our London and Dublin offices also removed rubbish from waterways. We remained supporters of Airlink's humanitarian initiatives, making donations in response to disasters in Tonga and Afghanistan. And with that, I'll turn it over to Steven.
Thank you, David. As already discussed, we were negatively impacted by the Russia-Ukraine conflict during first half 2022 and reported a net loss after tax of $313 million, equivalent to a loss of $0.45 per share. Excluding the impact of this one-off event, our core net profit after tax was $206 million. Lease rental income dropped by 5% compared with the first half of 2021, reflecting the 3% decline in the net book value of our fleet related to the write-down of aircraft that remain in Russia and the absence of $31 million in revenue from the second quarter related to these aircraft. Lease income was also affected by the number of aircraft that were in transition during the period. Revenue generated elsewhere included $74 million of interest and fee income, which was down around $20 million on the previous year, primarily because of lower fees from funding our airline customers' pre-delivery payments. Other sources of income rose sharply as we recognized the cash collateral held as security against the aircraft remaining in Russia, which alone accounted for $223 million. Gains on aircraft sales were $13 million, up $10 million on first half 2021 reflecting the age and number of aircraft sold. Our 2 largest expenses are depreciation and interest and together they accounted for 90% of the first half total when the effects of the one-time write-down are excluded. Depreciation, our largest expense item, increased by 4% relative to first half 2021, in line with our steady fleet growth. Finance expenses, our second largest item, declined 3% to $229 million, reflecting lower debt balances and stable cost of funds at an average of 2.9%, the same as in 2021. Combined effect of all of this was a reduction in our net lease yield to 7% in first half 2022 from 7.5% the previous year. Lower production rates and the rapid recovery in passenger demand are, however, having a positive effect on lease yields and values for modern technology single-aisle aircraft, especially those with leases attached. The average price of Singapore jet kerosene rose 89% to $125 a barrel in first half 2022, also lifting the relative attraction of modern fuel-efficient aircraft. We've seen this reflected in demand for the aircraft that we sell. For the first 6 months of the year, we recorded an impairment of $47 million for aircraft other than those that remain in Russia, related to the carrying value of 8 777 and A330 aircraft. This compared with aircraft impairment of $84 million in first half 2021. We also incurred a $6 million charge for impairment of financial assets, a substantial reduction on last year's $63 million. Operating cash flow net of interest expense rose strongly to $717 million, up 29% on first half 2021 as collections improved to 97% from 96% over the same time frame. Finished the half year with cash and undrawn committed liquidity of $6 billion and remained active in the capital markets and the banking markets. During the first half of 2022, we issued $300 million in bonds and drew $885 million in term loans. Our debt level declined to $16.3 billion compared to $16.8 billion at the end of 2021. We ended the first half of 2022 with 76% of our borrowings on fixed rate terms, which has allowed us to resist the upward pressure on global interest rates in our blended funding costs. S&P and Fitch reaffirmed our A- credit ratings in July of this year, after the release of our updated earnings guidance. Our gross debt to equity was stable at 3.3 to 1. Funds raised from external sources, together with robust internally generated cash flows saw us repay $1.7 billion in debt, with a further $1.1 billion scheduled for repayment in the second half of 2022. These obligations and our capital expenditure can be funded from our cash flow and committed liquidity of $6 billion. We had capital expenditure of over $600 million in first half 2022, primarily related to our aircraft deliveries and pre-delivery payments. This fell short of our expectations, mostly because of the manufacturer delays in delivering our aircraft. We have over $9 billion in committed CapEx between now and December 2029, which gives us a solid base for future earnings growth. Finally, on the tax side, we benefited from tax credits of $63 million in first half 2022 as a result of the losses related to aircraft remaining in Russia. Excluding these write-downs, our tax rate on core earnings was 12.1%, up from 11.7 % last year. This continued to reflect more assets being booked in higher tax jurisdictions, including the U.S. and the U.K. Now I hand back to Robert for his final comments.
Thank you, Steve. The extraordinary external events during the period since the start of 2020 have tested the fundamentals of our business, but we have come through them and demonstrated the resilience of our cash flows and earnings. As a reminder, we have generated over $5 billion in cumulative earnings since our inception. The aircraft operating leasing industry typically trails the profit trajectory of its airline customers coming out of a downturn. With our customers' recovery now clearly progressing and our exposure to aircraft that remain in Russia written down to 0, we are confident about future growth that will get a further boost as Chinese and Japanese borders reopen fully. We would like to express our gratitude for the continuous efforts of our colleagues, who we thank for their diligence and persistence, to our Board of Directors for their support and guidance and we appreciate the ongoing support of all of our other stakeholders. This concludes our review of the industry, our company's financials and our outlook and I'll pass the call back to Tim.
Thanks, Robert. This wraps up management's formal commentary. We now have time for Q&A and out of fairness to others request that each participant restrict themselves to 1 question unless time permits for additional queries. I'll hand the call back now to the operator for the Q&A session.
[Operator Instructions] Your first question is from Hillary, who's from Deutsche Bank.
You said you sold 5 aircraft in the first half of this year from the owned fleet. Could you just remind us what your sales strategy is, what type of aircraft you're targeting to sell, things like that? And then if you have a target number of aircraft that you're pointing to sell this year or next year?
Thanks, Hillary, It's Robert. Our whole approach towards selling aircraft is to try and keep the fundamentals of our portfolio metrics in line. And so we tend to sell 3 types of aircraft: those approaching 12 years of age because we want to keep our aircraft fleet full of aircraft less than 12 years old; those older technology in the fleet, and any aircraft where we have a particular risk concentration on a particular customer. So those are the things we look at. And we didn't give guidance on the second half of the year, but we are planning to sell.
Okay. Great. So you would expect that number to go up, I guess, going forward?
Yes.
Okay. Sounds good. That's helpful. And then just a longer term question for me. I know that the proportion of the world to be only 5 lessors, now passed the 50%. Just over the longer term, do you see that trend increasing over the longer term or do you see that kind of falling now that airlines are on a better footing in terms of the percentage of the fleet being released versus owned?
Yes. So I think if I remember our own numbers correctly, we think we're about 52% now in the market that are owned by operating lessors. I see that growing slowly towards 60%, but I don't really see it going much above 60%. And most airlines, once they've returned to profitability, generally want a mix of aircraft that leave on their balance sheet and aircraft that they lease more for operating lessors to hedge their residuals. I don't see a fundamental change in that. Although in the short term, obviously, there's a number of balance sheets under pressure in the airline market. And so this may drive more demand for basically puts and leasebacks in the same -- during the sort of near term.
Your next question is from Michelle from Citi Research.
Thank you for giving me this opportunity to raise the question. So my question is about the net lease yield. I think I understand that for the first half because of the airplanes in Russia, we experienced some reduction in the net lease yield. But given we have a full write-down of the aircraft, so going forward, how should we think about this net lease yield trend given all the things you observed in the market? Can you shed some light?
Michelle, it's Steven here. I think the -- as you said, one of the reasons for the fall was the absence of the rental income on the aircraft that remain in Russia. The other one was the number of aircraft that David talked about, which were in maintenance and transitioning between different lessees. So those were also not earning revenue during the period. So I think as we move into the second half of the year, as you say, the Russian aircraft, while the aircraft that remain in Russia have been taken out of the equation here. Those other aircraft should all get delivered to their new lessees during the course of the second half. So we should start to see that tick up. And also, I think the third element that we will start to see now is that as the delays from manufacturers are working their way through the system. As both Robert and David talked about, we're now starting to take delivery of these 787 aircraft, which we've been waiting a long time for. That should also help as well. So I think this should be the bottom and we should start to see an upturn as we move through the rest of the year.
So if we have like a longer term horizon, if we strip out Russia without those transition, of its aircraft in transition, how should we think about maybe from a longer term perspective?
Michelle, this is Robert. Maybe I'll take that one. So basically, as I mentioned in the presentation, the earnings of the leasing coming in a normal cycle, we would expect to lag the airlines coming out of the downturn. And the reason for that, if you think about it, if you place aircraft during a recession, they're going to be placed at lower yields than in a recovering market. So there's a time lag between the market turning and the impact of that increased net lease yield feeding into your book. The way to think about it is, your net lease yield then should gradually come up after the downturn. So starting next year, I think that should happen.
Yes, yes, it's clear. So if we focus on like the new lease we signed maybe this year or under negotiation with the potential customers, so basically, my question is, can we pass the pressure from rising yield from the funding side to the customers for...
So the way we write our leases is what we call floating fixed where we basically agree a lease rate today, but the actual lease rate is only fixed on delivery depending upon the change in interest rates between now and delivery. Now I just want to sort of give some context. For any large leasing company, you must remember, if you take us as an example, we've got $20 billion of assets and net book value on our books. We will not add $20 billion of new deals every year. If you add $4 billion, that's the equivalent of 20% of your book. So as you grow, the ability to pull that net lease yield up rapidly is more difficult just because of the base size of your portfolio you're beginning with. Does that makes sense?
Yes, yes, yes.
Your next question is from [ Karen ], who's from Credit Suisse.
The management mentioned number of potential to the extent macro value for the Russian aircraft is around 28%. I think that the number is quite impressive, and I think that is much higher than the average. I suppose the average number for the portfolio should be like less than 10%, right? So I just wonder, what is the key driver behind that number before all this Russia-Ukraine situation, why would you like expect -- prepare such a high collateral ratio for your Russian aircraft? Is it because like -- your isle setting, isles are much weaker than the parties from your other clients? Or it is because of the country risk? So I just want to know the rationale behind that consideration. And are there any other like regions in the country or your client's countries that you are also expecting a high collateral rate?
[ Karen ], it's Robert. Thanks for the question. So basically, one of the differences between us and some of our peer group is right ways through the management team, we're very risk aware. And when we put transactions in place, we don't just let a Martin guy go off and do the transaction. It's approved at our revenue committee before we sign an LOI, and as part of that revenue committee process, we will discuss a number of factors, including the airline credit, the jurisdiction as to whether we can easily repossess from the jurisdiction. And think about as well, the total amount of risk we're taking to any one particular country. And to put it in context, sort of Russia for us was 2.5% of our total assets. We kept it as a reasonably low component and lower than sort of its proportion of the world traffic. So we take all of those things into account. And so you'll tend to find that with emerging markets where we're concerned about the ability to repossess, then we will take more security.
Your next question is from Parash from HSBC Hong Kong.
Management if you can help us to understand 2 parts of the question. First, with respect to the net yield realized, given first half was challenging in many fronts, is it fair to view that in this cycle, probably the first half of 2022, would likely to be marked as the floor in terms of net yield? And secondly, on Slide 21, I mean when we look at the difference between your fixed rates lease versus fixed rate debt, the spread is now 20 percentage points. You have benefited thus far with the declining interest rate. But from here on, do you have an intention to move your fixed rate debt to match the fixed rate lease? Otherwise, if you can help us to run through the sensitivity of, let's say, 50 basis point change in interest rates, how would this effect?
Okay. Thanks, Parash. Maybe I'll take the first one and Steve take the second one. So the first half, you're correct, was unique in a number of ways for us. Remember how you calculate net lease yield and so you take an average yield over the half year. When we basically look back, there are sort of 3 things that were special. One is, of course, we only booked the Russian revenue until we've received the last amounts in cash, which would have been in March. And we didn't -- remember, we didn't write down to the end of the period. The second thing is we had a number of aircraft in transition that were placed earlier in the year but we're putting them through maintenance during that period to get them back up on lease, I think it was 17 in total. And so we weren't getting revenue from those aircraft. And obviously, that won't be the case for the second half once they're back up and lease will have revenue for their aircraft. And the third thing was the lack of capital expenditure due to these manufacturer delays which also meant in terms of putting new aircraft on the books with good rentals. We didn't get the positive impact of that in the first half of this year. So in answer to your question, I think, yes, probably when we look backwards, sort of in 2, 3 years' time, this will probably be the norm.
Okay. Parash, maybe, it's Steven, I'll take the second one. I think when you look at the way we build the liability side of our balance sheet, what you always have to bear in mind is that we are not a static business. And so we constantly got aircraft coming in and aircraft going out, a, because we are buying and selling, but you've also got changes in the lease portfolio when we are remarketing and extending, transitioning aircraft. So what we never want to be -- would be to be 100% matched, because one day later we'd be mismatched. So we're always maintaining that. What we also always want to maintain is some element of floating rate debt in the portfolio because when we sell, it's much more easy to break that without having to have any mark-to-market issues. The final point is also that part of this is used to fund the predelivery payments, and it isn't all just about the aircraft that we own. And so on that side of the balance sheet, I think that's the way we think about it, and we don't want to be, if you like, overly matched. The other thing is, as Robert did talk about on the asset side of the balance sheet, the way that we structure the leases is that for, by far, the majority of the aircraft that we placed in the future. Those will continue to adjust for interest rates until the point at which they deliver. And so again, it isn't that what we've locked in as funding today needs to cover those future deliveries because that adjusts as well as we move forward.
No, fair enough. To this point, hypothetically, if the interest rate on your existing debt increases by 50 basis points, I presume your lease would not move in the same fashion because lease is fixed because they are already within the contract period. Does it make you, on the margin, more vulnerable in a rising interest rate environment? I understand that there's the risk that every business needs to take, but is it a fair way to understand?
I don't think you -- it's part of the picture, but not all of it. Because, a, you have all those aircraft moving in and out all the time, which I already talked about. So it's not a static portfolio. Also, where we are earning the PDP income as well on the other side can also be floating rate. And so it isn't that you're just funding a static portfolio on any single point in time. So it's not a totally linear correlation, I don't think, Parash, in the way that you're thinking about it.
No. I get your point now. So that's clear now.
Your next question is from Shashank from Somerset Capital.
My first question is for Steven. If you look at the lease rental income that basically declined by roughly $60 million. And if I understand, the exposure to the Russian aircraft would have been around half of that if you have not received payments for 3 months of the year. So is it fair to say that another $30 million was from the other aircraft, which were under maintenance and transitioning?
I think that the drop in rental income that I talked about, as you say, from -- I don't think it was quite -- I had about $50 million at the top of my head, of which sort of $30 million of that was from the Russian leases, as I talked about. And the bulk of the rest, yes, it's from the aircraft that we have that we're transitioning from one lessee to another that we're not earning income during the period. Once we have all of those back on lease, we should catch up that proportion, obviously, until the aircraft that remain in Russia, we can actually get and return back to us and be able to remarket them. That piece of the revenue won't return.
There's also one other bit to it. We had a number of aircraft just coming off lease at the end of 9-year leases and 10-year leases in the first half. And obviously, the rental you achieve on a 10-year-old aircraft is different to what you would have got on a new aircraft 10 years before, so you have a step down in lease rental as well on some aircraft.
Right. And is that the reason why the utilization rate is 96%? Does that reflect the aircraft under maintenance and transitioning as well?
This is David. You're absolutely right. Those aircraft, which were in transition maintenance during the first half, had an impact on the utilization rate. And as Steven and Robert has said in their earlier comments, those will be back on lease in the second half, and we'll see a recovery in that utilization rate.
Okay. And you -- at the end of June, your -- you mentioned that you own 390 aircraft. Does this still include the Russian aircraft?
Yes, Shashank, it does. We still own them. We've written them down to 0, but we still own the aircraft. We intend still to get them back if we can. So we're not giving up ownership.
Right. And final question, like, given that aircraft values are now rising, do you see an end to the impairment charges on your non-Russian aircraft as well?
Shashank, it's Steven. Yes, I think we've seen that already coming down year-on-year on the non-Russian part of the fleet. And I think that will continue. I think what we've already seen is values coming out of the appraisal firms for the narrow-body aircraft are already going back up. I think what we should be seeing now that the values for the wide-body aircraft have, at worst, bottomed out and I'm hopeful that as we move into the second half of this year, we should start to see that come back up as well. A little bit how Robert talked about earlier in terms of how things lag the profit trajectory of the airline customers. This is another thing that always lags a bit because the appraisal firms are only reflecting what they see in the market. They never buy and sell aircraft themselves. And so it takes a bit of time for that to flow through into their valuation. So there is typically this lag that we see as we come out of any downturn.
Thanks, Shashank. Operator, we've got time for one more question. So if there is anyone who hasn't asked a question, yes, and would like to get one in, management's got time for one more.
[Operator Instructions] Your next question is from [ Cheryl ], who's from CICC.
I just have one question. May I know your upcoming financing plan in the rest of 2022, like mainly like U.S. dollar bond issuance pipeline, if you have any?
Thanks, [ Cheryl ], it's Steven. Obviously that will depend on the level of CapEx that we have during the course of the year. We have -- I think, as I covered in my remarks earlier, I think $1.1 billion to refinance as we move through the year. We actually repaid one of our bonds 1 month early today, which we were able to do under the documentation because we were long on cash. I think as we move forward through the rest of the year, there'll be an amount of refinancing that we need to look at. I think in the bond markets, we need to see a bit more stability. What we've seen there is that, yes, the base rate has gone up, but also margins generally have expanded. But for us, much less than our peer group, but more than we feel is real value for us at the moment. And so we'll be watching that market carefully. But I think the bulk of what we'll be doing in the second half of the year will be the refinancing.
All right. So I just want to ask, so if the market is more favorable for your bond issuance and would you be like continue to tap on your credit facilities or will do more refinancing via maybe bank borrowings, like what are the other options for you?
I guess, first of all, the beauty of sitting on $6 billion of available liquidity is that we're very rarely going to be backed into doing something where we don't think the market is right for us. And so it enables us to be opportunistic, it enables us to time our entry into different markets. We have all of that available liquidity. We've got 0 drawings under any of our revolving credit facilities today, which gives us a huge amount of flexibility in what we can do. Clearly, if we see opportunity, yes, we don't say that we won't go to that market. But we will be selective and we are fortunate that we have the ability to time our entry into those markets when it is most favorable to us.
Your next question is from Sabrina, who's from JK Capital.
I just have one question regarding your order of 80 aircraft in one go and your delivery schedule. Could you provide some background why you did the deal, a record deal? I don't remember ever you did that size. So could you provide some background why you decided to do this deal in one go at this time? And what is your delivery schedule by the year and placements schedule guidance?
Yes. So Sabrina, I'll start off with the long-term strategy, and then Dave can probably add to it, as he was the guy in the ditches negotiating for us. The first thing is we started negotiating this order a year before we actually consummated it. So it didn't just happen overnight. We take a long-term view of the business, and we intend to be a long-term player. And so we always want a delivery stream with both of the big manufacturers. And we're getting to a point whereby with both of them are orders in total have diminished below 100 orders. And what we've learned over our history is that to have consistent orders in place with both of them is very, very important to us. And so that's the reason why we engage when we did. And you can imagine when we started doing this back in 2021, there weren't a lot of other people negotiating orders at that point in time. David is a slow and patient negotiator and his team, and basically during the negotiation process, we focused on what was important to us and particularly as well, the mix of the aircraft. Well, this time around, we had a much greater A321 content than we've had previously because we see that's a general trend in the market where the demand for the larger aircraft is coming from our airline customers. Dave?
Yes. Thank you, Robert. I would just give a little bit more detail, which is you were asking about the delivery schedule. These deliveries will be '27 to '29. And what we've done is we -- as Robert said, we began our discussions with Airbus quite some time ago and optimized when we could get the best delivery positions and in both for -- and to get a good price, of course, which is our top priority. So that was part of the discussion with Airbus. But as Robert said, we have ongoing discussions with both of the major OEMs as well as with the engine OEMs. So we are in almost daily communication with these very important stakeholders, and we're looking for opportunities to add to our CapEx pipeline on all fronts, and we'll continue to do that.
And maybe I should add, Sabrina. You'll have noticed, we also supplemented that order with doing other transactions directly with airlines, and we'll continue doing that on both the Boeing and the Airbus side, where we picked up additional deliveries from airlines with excess deliveries in the first half of this year, and I expect that to happen again in the second half.
Right. Since you started negotiation a year ago, that would imply that the pricing reflects the market situation back then or should we look at the situation today, because...
Yes, quite specifically down, pricing to go up in all negotiations.
Okay. Yes, just because one of your peers said on their call that they placed the order in 2020 when everything was just gloomy and placing order now is a different pricing. So I was just wondering what is the background of this deal. So I think if you provide some color on that. On the delivery schedule and placement schedule, I meant to ask...
Sabrina, we should just note -- sorry, when that other operating lessor was placing orders in the future, we did $7 billion of purchasing leasebacks for the best airlines in the world at their pricing. So there is no one correct answer to strategy. They're just in different strategies, and we were the guys with the money in 2020.
So on the placement ratio by the year, next year, 2023, 2024 and '25 and all the way to '29, would you be able to provide those placement ratio for next year? Let's say, out of the deliveries for next year, how much is placed already?
So we typically place our aircraft 18 months to 24 months in advance of the delivery. So if you think ahead to, say, this landmark Airbus order we placed, we won't start working on those placements for quite some time.
Great. Okay. Thank you everybody for your participation on today's call. Please don't hesitate to contact me directly on timothy.ross@bocaviation.com should you have any follow-up questions. Thank you very much. Operator, we can now terminate the call.
Thanks everyone.
Thank you.