China's BOC Aviation warns of net loss as planes stranded in Russia

China's state-owned BOC Aviation is expecting to slip into a net loss of at least $310m for the first six months of the year, affected by a substantial write down in its Russia business. The Hong Kong-listed unit of Bank of China said in a filing on Sunday evening that it has decided to cut the net book value of 17 leased aircraft remaining under control of Russian airlines to zero from $803.6m. The company believes "it is unlikely to be able to recover those aircraft from Russia in the foreseeable future, if ever." It has recovered only one from the country so far since the start of the war in Ukraine. The net impact of the write-down to its pretax profit is $580.7 million, as it will be partially offset by cash collateral of $222.9 million from the airlines. Nevertheless, the company is not able to avoid a net loss of between $310m and $330m for the first half of the year, compared to a profit of $254m a year ago. The size of BOC Aviation's Russia-related loss is similar to that of Japan's SMBC Aviation Capital, which, with 35 aircraft stranded in Russia, has the largest exposure to the country among Asian lessors. Its parent Sumitomo Mitsui Finance and Leasing said in mid-May that it recorded an extraordinary loss of 81.96b yen ($605m) for the financial year that ended in March. Most regional and global lessors acknowledged months ago that they have sustained financial losses due to European Union sanctions requiring the termination of all aircraft leases with Russian companies by March 28. Apart from Avolon Holdings, co-owned by China's Bohai Leasing and Japan's Orix, which reported $304m in Russia-related losses, major Chinese aircraft lessors had yet to announce how they would treat their exposure to the Russian market.<br/>