In-Depth Analysis of Fleet Expansion and Global Competitive Position of Avolon, a Subsidiary of Bohai Leasing

Now I will prepare a detailed analysis report for you.

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As of the end of 2025, the total fleet size of Avolon, a majority-owned subsidiary of Bohai Leasing, reached

, including 596 owned aircraft, 36 managed aircraft, and 500 on-order aircraft, serving 139 airline customers in 61 countries worldwide [0][1]. This scale makes Avolon firmly the world’s second-largest aircraft leasing company, second only to AerCap’s 1,728-aircraft fleet [2][3].

In terms of fleet structure, Avolon’s fleet shows a distinct youthfulness feature. Under its sustainable development strategic commitment, Avolon is dedicated to updating 75% of its fleet to new-technology aircraft by the end of 2025 [4]. The advantages of a young fleet include higher fuel efficiency, lower maintenance costs, and stronger market liquidity, which hold important strategic value against the backdrop of the aviation industry’s pursuit of decarbonization and emission reduction.

The global aircraft leasing market presents a highly concentrated competitive pattern. According to industry data, as of the end of 2024, the rankings of the top 10 global aircraft leasing companies are as follows [2][3]:

Rank	Company	Fleet Size (Units)	Market Positioning
1	AerCap	1,728	Global No.1
2	Avolon	1,132	Global No.2
3	SMBC Aviation Capital	1,100	Global No.3
4	Air Lease Corporation	900	Global No.4
5	BBAM	700	Global No.5
6	ICBC Leasing	650	China’s No.1
7	BOC Aviation	620	China’s No.2

The gap between Avolon and AerCap is about 596 aircraft, accounting for a 34.5% difference. Notably, Avolon’s order backlog reaches 500 aircraft, almost equivalent to the size of its existing owned fleet, providing sufficient momentum for its future expansion [1].

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In July 2025, Avolon signed a major aircraft procurement agreement with Airbus, intending to purchase 75 A321NEO and 15 A330NEO aircraft, which are expected to be delivered sequentially by the end of 2033 [1]. In addition, the agreement grants Avolon the option to purchase an additional 25 A321NEO and 15 A330NEO aircraft.

Upon completion of this procurement, Avolon’s Airbus order backlog will increase to

, making it the company with the largest aircraft order backlog globally [1]. The core significance of this strategic move is reflected in the following aspects:

1. Enhanced Bargaining Power
   : Large-scale orders enable Avolon to obtain more favorable prices and delivery terms in negotiations with aircraft manufacturers, thereby reducing unit aircraft purchase costs.

2. Optimized Fleet Structure
   : Both A321NEO and A330NEO are new-generation narrow-body and wide-body aircraft, which meet the market’s demand for fuel efficiency and strengthen the technological advancement of Avolon’s fleet.

3. Long-Term Customer Lock-In
   : New aircraft orders are usually accompanied by long-term lease agreements, which help establish stable rental income sources and customer relationships.

In the first half of 2025, Bohai Leasing completed the acquisition of 100% equity interest in Castlelake Aviation Limited (CAL) [5]. This M&A transaction holds important strategic significance for Avolon’s fleet expansion:

• Scale Effect
  : After CAL’s fleet is included in the consolidated scope, it directly drives Avolon’s fleet size to exceed the 1,000-aircraft mark.
• Customer Resources
  : CAL’s customer network further enriches Avolon’s airline customer portfolio.
• Synergistic Effect
  : The integration of the two companies’ fleets helps optimize asset allocation and improve overall return on assets.

As of the end of the first quarter of 2025, Avolon’s fleet size reached 1,096 aircraft (including 604 owned aircraft, 35 managed aircraft, and 457 on-order aircraft), serving 141 airline customers in 60 countries worldwide [5].

Based on historical data, Avolon’s fleet size shows a steady growth trend [1][3]:

Year	Fleet Size (Units)	YoY Growth (%)	Order Backlog (Units)
2021	850	5.0	280
2022	920	8.2	320
2023	1,020	10.9	380
2024	1,076	5.5	442
2025	1,132	5.2	500

Over the past five years, Avolon’s fleet size has increased by 33.2% cumulatively, with a compound annual growth rate (CAGR) of approximately 7.4%. The order backlog has grown from 280 to 500 aircraft, representing a 78.6% increase, demonstrating strong expansion momentum.

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One of Avolon’s core competitive advantages lies in its young, high fuel-efficient fleet portfolio. According to industry analysis reports, the average age of Avolon’s fleet is lower than the industry average, and the proportion of new-technology aircraft reaches 75% (target value) [4]. This advantage has multiple strategic implications in the current market environment:

1. Operational Cost Advantage
   : New-generation aircraft improve fuel efficiency by 15-20% compared to previous-generation models, significantly reducing airlines’ operational costs and enhancing the attractiveness of leasing solutions.

2. Residual Value Guarantee
   : Young fleets have stronger liquidity and higher residual values in the secondary market, helping to reduce asset impairment risks.

3. Environmental Compliance
   : As global aviation carbon emission regulations become stricter, high fuel-efficient models are more favored by airlines, aligning with long-term market demand trends.

Avolon’s performance in the environmental, social, and governance (ESG) field is at the industry-leading level. According to Sustainalytics’ rating, Avolon received a “Low Risk” ESG score of 16 [4], which is an excellent level in the aircraft leasing industry.

Avolon’s sustainable development strategy includes:

• Green Lease Framework
  : Integrate ESG factors into long-term strategic planning and establish a green lease framework to guide customers to jointly promote sustainable aviation development.
• Decarbonization Commitment
  : Dedicate to promoting the achievement of the aviation industry’s decarbonization goals through fleet renewal and optimization.
• Transparent Disclosure
  : Publish annual sustainability reports since 2022 to continuously improve the quality of ESG information disclosure.

Against the background of the growing emphasis on ESG investment concepts by institutional investors, Avolon’s sustainable development leadership helps attract more responsible capital and reduce financing costs.

In the first half of 2025, all three major international rating agencies confirmed Avolon’s international investment-grade credit ratings, with an overall upward trend in rating outlooks [1]:

• Fitch
  : Upgraded Avolon’s issuer rating from “BBB-” to “BBB”
• Moody’s
  : Upgraded Avolon’s issuer rating from “Baa3” to “Baa2”
• S&P
  : Raised the rating outlook of Avolon’s issuer rating (BBB-) from “Stable” to “Positive”

The consolidation and improvement of investment-grade credit ratings are of great significance to Avolon’s competitive advantages:

1. Lower Financing Costs
   : Higher credit ratings mean lower corporate bond yields, reducing capital costs.
2. Improved Capital Availability
   : Investment-grade ratings make it easier for Avolon to obtain bank credit support and bond market financing.
3. Expanded Business Development Space
   : Sufficient capital support enables Avolon to seize market opportunities for strategic M&A and large-scale order procurement.

Avolon serves 139 airline customers in 61 countries worldwide, with customer coverage across six regions: Asia-Pacific, Europe, Middle East, North America, Latin America, and Africa [1]. This broad geographical distribution brings the following advantages:

1. Risk Diversification
   : Fluctuations in a single regional aviation market will not have a significant impact on the overall business.
2. Diversified Growth Opportunities
   : The rapid growth of air travel demand in emerging markets provides continuous business expansion space for Avolon.
3. Enhanced Brand Influence
   : Long-term cooperation with major global airlines enhances Avolon’s industry reputation and brand value.

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The global aircraft leasing market is in a period of rapid growth. According to data from industry research institutions [2][3][6]:

• 2024 Market Size
  : Approximately USD 187.1 billion
• 2025 Market Size
  : Approximately USD 207.1 billion
• 2030 Market Size Forecast
  : Approximately USD 354.5 billion
• 2034 Market Size Forecast
  : Approximately USD 565.1 billion
• Compound Annual Growth Rate (CAGR)
  : Approximately 11.8%

The core driving factors for market growth include:

1. Recovery of Aviation Demand
   : Data from the International Air Transport Association (IATA) shows that global passenger traffic increased by 10.4% YoY in 2024, representing a 3.8% increase compared to 2019 [3].
2. Asset Lightening of Airlines
   : Affected by the pressure to repair balance sheets after the pandemic, airlines prefer leasing over purchasing aircraft.
3. Delivery Bottlenecks of Aircraft Manufacturers
   : Capacity constraints at Boeing and Airbus lead to tight supply of new aircraft, making leasing companies an important channel for airlines to obtain capacity.

In terms of aircraft type structure, narrow-body aircraft dominate the global leasing fleet. As of the end of 2024, narrow-body aircraft account for 72.8% (9,835 aircraft) of the global leasing fleet, wide-body aircraft account for 15.7% (2,120 aircraft), and regional and turboprop aircraft account for 11.5% (1,562 aircraft) [3].

Avolon’s fleet structure aligns with this market characteristic. According to public data, narrow-body aircraft account for a high proportion of Avolon’s orders, and the procurement of A321NEO further strengthens this layout. The dominant position of narrow-body aircraft is related to the following factors:

1. Changes in Route Structure
   : The importance of short-haul and regional routes has become increasingly prominent, and the rapid expansion of low-cost airlines has further driven demand for narrow-body aircraft.
2. Operational Flexibility
   : Narrow-body aircraft are more suitable for airlines to adjust capacity flexibly in response to demand fluctuations.
3. Economic Efficiency Advantage
   : On medium-capacity routes, narrow-body aircraft have more competitive per-seat costs.

The global aircraft leasing market presents a competitive pattern of “head concentration, long-tail dispersion”. The top five leasing companies (AerCap, Avolon, SMBC Aviation Capital, Air Lease Corporation, BOC Aviation) together account for approximately 8.4% of the market share [2][3].

The reasons for relatively low market concentration include:

1. High Capital Threshold
   : Aircraft leasing is a capital-intensive industry, and new entrants face high capital barriers.
2. Customer Relationship Stickiness
   : Airlines tend to establish long-term cooperative relationships with a few core leasing companies.
3. Significant Scale Effect
   : Large leasing companies have obvious advantages in financing costs, aircraft procurement bargaining power, and asset disposal channels.

For Avolon, consolidating and enhancing its global second-place market position is key to maintaining competitiveness. Continuous expansion of fleet size helps strengthen scale effects, forming a positive cycle of “scale - cost - competitiveness”.

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As the controlling shareholder of Avolon, Bohai Leasing’s financial performance directly reflects the operating status of the aircraft leasing business. According to publicly disclosed financial data [5][7]:

:

• Operating Revenue: RMB 17.117 billion, up 99.82% YoY
• Net Profit Attributable to Shareholders of Listed Company: RMB 669 million, up 72.21% YoY
• Non-Recurring Net Profit Attributable to Shareholders of Listed Company: up 106.81% YoY

The main driving factors for the significant performance growth include:

1. Continuous Recovery of Air Passenger Demand
   : Strong recovery of global air travel demand drives growth in aircraft leasing and sales revenue.
2. M&A Contribution
   : The inclusion of CAL in consolidated financial statements brings incremental contributions to revenue and profit.
3. Optimized Fleet Structure
   : The yield level of the aircraft fleet gradually improves, having a positive impact on overall profits.

:

• Operating Revenue: RMB 40.284 billion, up 60.58% YoY
• Net Profit Attributable to Shareholders of Listed Company: -RMB 1.372 billion (affected by goodwill impairment)

It should be noted that the large loss in the first three quarters of 2025 is mainly due to a one-time goodwill impairment provision of approximately RMB 3.277 billion related to the disposal of equity in GSCL (Global Sea Containers Ltd) [7]. Excluding this non-recurring factor, the operating performance of the core business remains stable.

Avolon is the core profit source of Bohai Leasing, and its operating performance has a decisive impact on the parent company. From the perspective of business structure:

1. Aircraft Leasing Business
   : Contributes the main revenue source. In the first half of 2025, lease rates and renewal rates remained at high levels, and the market value of aircraft increased steadily.
2. Aircraft Sales Business
   : With the acceleration of fleet renewal, aircraft disposal income has become an important supplementary profit source.
3. Container Leasing Business
   : Its subsidiary Seaco has an owned and managed container fleet of approximately 4.055 million CEUs, with an average occupancy rate of 98.50%, contributing stable cash flow.

Avolon’s credit rating upgrade and business scale expansion provide important support for the optimization of Bohai Leasing’s overall financing capability and capital structure.

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The aircraft leasing industry is highly correlated with the air transport industry, and is greatly affected by factors such as macroeconomic cycles, trade frictions, geopolitical events, and public health events. Although the industry is currently in a recovery cycle, the following risks still require attention:

1. Demand Fluctuation Risk
   : Economic recession or major external shocks may lead to a decline in air travel demand, which in turn affects lease rates and rental levels.
2. Asset Impairment Risk
   : Aircraft residual values are affected by market supply and demand, technological iteration, model popularity and other factors, with high uncertainty.
3. Interest Rate Fluctuation Risk
   : The financing costs of aircraft leasing companies are closely related to the interest rate environment, and rising interest rates may compress profit margins.

Competition in the aircraft leasing market is becoming increasingly fierce, mainly manifested in:

1. Rise of Chinese-Funded Leasing Companies
   : Chinese-funded leasing companies such as ICBC Leasing and BOC Aviation, supported by their parent banks’ capital, are increasingly competitive in the international market.
2. Accelerated Industry Integration
   : Industry M&A events such as SMBC Aviation Capital’s acquisition of Goshawk Aviation and Avolon’s acquisition of Castlelake occur frequently, and market concentration may further increase.
3. Threat from New Entrants
   : Institutional investors such as private equity funds and insurance companies are increasingly interested in aircraft leasing assets, which may bring new competitive pressure.

Avolon’s fleet expansion strategy faces the following execution risks:

1. Delivery Delay Risk
   : Capacity bottlenecks of aircraft manufacturers may lead to order delivery delays, affecting the realization of expected returns.
2. Integration Complexity
   : Fleet integration, customer migration, and management system docking after M&A have execution difficulties.
3. Capital Raising Pressure
   : Large-scale order procurement and M&A expansion require sufficient financing support, and capital market fluctuations may affect capital availability.

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Based on the above analysis, Avolon’s fleet expansion strategy can effectively support its global competitive position in the short term, for the following reasons:

1. Consolidated Scale Advantage
   : The 1,132-aircraft fleet firmly ranks second globally, and the 500-aircraft order backlog provides sufficient momentum for future growth.
2. Favorable Market Opportunities
   : The recovery of the global aviation industry, shortage of aircraft supply, and the trend of airline asset lightening are all beneficial to leasing companies.
3. Robust Strategic Execution
   : Avolon has a good track record in M&A integration, order procurement, and customer expansion.

In the medium to long term, Avolon needs to focus on the following strategic priorities:

1. Fleet Quality Improvement
   : Continue to promote fleet youthfulness to ensure the achievement of the 75% new-technology aircraft target.
2. Strengthened ESG Leadership
   : Maintain industry-leading status in sustainable development to attract ESG-oriented investors.
3. Deep Layout in Emerging Markets
   : Increase business layout in high-growth markets such as Asia-Pacific, India, and the Middle East.
4. Enhanced Risk Control
   : Establish a more sound asset portfolio management and residual value prediction system to improve anti-cycle capabilities.

Based on multi-dimensional indicators such as fleet size, order backlog, customer network, credit ratings, and financial performance, Avolon’s competitive position in the global aircraft leasing market can be evaluated as follows:

Evaluation Dimension	Evaluation Result	Industry Status
Fleet Size	1,132 aircraft	Global No.2
Order Backlog	500 aircraft	Global No.1
Customer Coverage	61 countries / 139 airlines	Global Leading
Credit Ratings	Baa2/BBB (Investment Grade)	Upper Tier of the Industry
ESG Performance	Sustainalytics Score 16	Industry Leading
Financial Soundness	Negative ROE (Short-Term)	Needs Improvement

: Avolon’s fleet expansion strategy can effectively support its position as the world’s second-largest aircraft leasing company at the current stage. Its young fleet, ESG leadership, investment-grade credit ratings, and large order backlog jointly constitute Avolon’s core competitive advantages. However, the company needs to continuously pay attention to industry cyclical risks, intensified competition risks, and execution challenges, and consolidate and strengthen its long-term competitive advantages through measures such as fleet quality improvement, risk control enhancement, and market expansion.

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[0] Jinling API Data - Overview and Financial Data of Bohai Leasing

[1] Bohai Leasing Official Website - Announcement on Avolon’s Procurement of 90 Airbus Aircraft (http://www.bohaileasing.com/content/details_177_1721.html)

[2] GM Insights - Aircraft Leasing Market Share, Growth & Forecast 2025-2034 (https://www.gminsights.com/industry-analysis/aircraft-leasing-market)

[3] Sina Finance - Analysis of Competitive Pattern of China’s Aircraft Leasing Industry (https://finance.sina.com.cn/stock/relnews/hk/2025-11-06/doc-infwmrcc2115812.shtml)

[4] Avolon Official Website - Sustainability Reporting (https://www.avolon.aero/sustainability-reporting)

[5] Securities Times - Bohai Leasing’s Net Profit Attributable to Shareholders in Q1 Reached RMB 669 Million, Up 72.21% YoY (https://