Market Perspectives Robert Martin Managing Director & Chief - PowerPoint PPT Presentation

Market Perspectives Robert Martin Managing Director & Chief Executive Officer Growth Frontiers Asia Pacific Conference 31 st October 2017

Disclaimer This presentation contains general background information about the activities of BOC Aviation Limited (“ BOC Aviation”), current as at the date hereof. This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of BOC Aviation or any of its subsidiaries or affiliates in any jurisdiction or an inducement to enter into investment activity. The information contained in this document has not been independently verified and no representation or warranty, expressed or implied, is made as to, and no reliance should be placed on, the information or opinions contained herein. The information set out herein may be subject to revision and may change materially. BOC Aviation is not under any obligation to keep current the information contained in this document and any opinions expressed in it are subject to change without notice. None of BOC Aviation or any of its affiliates, advisers or representatives (including directors, officers and employees) shall have any liability whatsoever for any loss whatsoever arising from any use of this document or its contents or otherwise arising in connection with this document (whether direct, indirect, consequential or other). No part of this document, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of BOC Aviation or any of its affiliates, advisors, agents or representatives including directors, officers and employees shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with the document. This document is highly confidential and is being given solely for your information and for your use and may not be shared, copied, reproduced or redistributed to any other person in any manner. This document may contain “forward -looking statements”, which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or that include the words “will”, “would”, “aim”, “aimed”, “will likely result”, “is likely”, “are likely”, “believe”, “expect”, “expected to”, “will continue”, “will achieve”, “anticipate”, “estimate”, “estimating”, “intend”, “plan”, “contemplate”, “seek to”, “seeking to”, “trying to”, “target”, “propose to”, “future”, “objective”, “goal”, “project”, “should”, “can”, “could”, “may”, “will pursue” or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond BOC Aviation’s control that could cause the actual results, performance or achievements of BOC Aviation to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Neither BOC Aviation nor any of its affiliates, agents, advisors or representatives (including directors, officers and employees) intends or has any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this document. Any securities or strategies mentioned herein (if any) may not be suitable for all investors. Recipients of this document are required to make their own independent investigation and appraisal of the business and financial condition of BOC Aviation, and any tax, legal, accounting and economic considerations that may be relevant. This document contains data sourced from and the views of independent third parties. In replicating such data in this document, BOC Aviation does not make any representation, whether express or implied, as to the accuracy of such data. The replication of any views in this document should not be treated as an indication that BOC Aviation agrees with or concurs with such views. The information contained in this document is provided as at the date of this document and is subject to change without notice. 2

Summary The BOC Aviation Journey Reflections On The Last Year Looking Forwards – What Are We Thinking About? 3

Private & Confidential The BOC Aviation Journey Total Assets Ownership SALE established with 50:50 1993 joint ownership between Singapore Airlines and Boullioun Aviation Services Temasek and GIC each 1997 1997 >US$0.5B became 14.5% shareholders 2000 >US$1B Bank of China acquired 100% 2006 >US$3B 2006 of SALE on 15 Dec 2006 2009 >US$5B 2013 >US$10B Listed on HKEx on 1 June 2016 - 70% by Bank of China Jun-2017 US$14.4B - 30% by public float 2018 will be our Company’s 25 th anniversary! 4

Core Competencies of a Leasing Company BOC Aviation Performs on Every Measure  Procurement 740 aircraft purchased totaling more than US$37 billion  Leasing More than 750 leases executed with more than 140 airlines in 52 countries  Debt financing 1 More than US$20 billion in debt raised since 1 January 2007  Sales 280 aircraft sold  Transitions More than 60 transitions  Repossessions 2 33 aircraft in 13 jurisdictions  Fleet Utilization 3 Average 99.8%  Cashflow Collection 3 Average 99.6% US$2.7 billion 1 in cumulative net profit after tax generated since inception All data as at 30 September 2017, since inception unless otherwise indicated Notes: 1. As at 30 June 2017 2. Includes repossessions and consensual early returns 5 3. Average value over last 10 years since 1 January 2008

Reflections on the Last Year 6

The Operating Leasing Industry Today Customers Suppliers 5 key airframe manufacturers c.800 airlines globally 3 key engine manufacturers 46,950 new aircraft required over the next 20 years 1 10,000+ supply chain partners Aircraft Leasing Industry Investors Funding 200+ active banks 1000+ capital market investors 350+ aircraft lessors Notes: 1. Boeing CMO 2017-2036 7

Airline Demand – Macro Environment What made the headlines? • Trump • North Korea • Middle East • Turkey • China CPC meeting last week • Brexit • French and German elections • Catalonia But… • Expected global GDP growth for 2017: 2.7% 1 • Airline traffic growth of close to 8% 2 Notes: 1. Based on World Bank Global Economic Prospect Report, as at June 2017 2. Source: IATA (August 2017) 8

Underlying Traffic Growth Growth in the middle classes 1 to be driven by Above-trend passenger demand growth emerging economies Middle class households (million) Middle class households (million) 7.9% 6.5% 6.3% Asia: ~x2 5.9% Asia: ~x2 5.3% 5.2% Asia: ~x2 Asia: ~x2 338 199 56 99 40 60 26 16 189 168 150 127 91 96 75 83 2012 2013 2014 2015 2016 Aug-2017 2000 2010 2020E 2030E North America Europe LATAM Asia RPK growth (YTD) 20-year RPK trend growth Source: IATA (August 2017) Source: Euromonitor Air traffic estimated to grow by 150% in the next Fleet expected to double in the next 20 years two decades… 1990-2016 2017-2036 20-year fleet growth rate, % Air Traffic +5.3% +4.7% 3.7% 3.5% Global +2.9% +2.8% GDP First 9/11 & Global Gulf Second Economic War Gulf Crisis War Air traffic is estimated to 2017 grow by 2.5x by Airbus Boeing 2036 Source: Airbus Global Market Forecast, Boeing Capital Market Outlook Source: Ascend Flightglobal Fleet Forecast 2015, Oxford Economics, Boeing Current Market Interactive Forecast 2017-2036 Note: 1.Defined as number of households with yearly income between US$25,000 and 9 US$150,000

Positive Environment with Airline Profitability near Records Emerging markets continue to record high air Elevated airline profitability sustained traffic growth Aggregate net profit Aggregate net profit RPK growth, YTD RPK growth, YTD US$ billion US$ billion 10.2% 8.7% 7.5% 7.4% 7.0% 4.5% Africa Asia Pacific Europe Latin America Middle East North America Source: IATA (Airline Industry Economic Performance – June 2017) Source: IATA (August 2017) High load factors suggest well-managed capacity Passenger Load Factor Passenger Load Factor % YoY change, % 5 90 80 0 70 60 (5) 50 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Passenger Load Factor YoY % Change (LHS) Passenger Load Factor (RHS) Passenger Load Factor 12M Mov. Avg (RHS) Source: IATA (August 2017) 10

Jet Fuel Price Movements Over The Last Six Years US$/BBL 140 120 100 80 US$67.27 60 40 20 0 7/2011 1/2012 7/2012 1/2013 7/2013 1/2014 7/2014 1/2015 7/2015 1/2016 7/2016 1/2017 7/2017 11

Is BRIC back? Domestic Airline Traffic Growth 2 Latest GDP Size of Domestic Country Growth Rate 1 (RPKs based on YoY % Market as % of Total change) Brazil 0.7% 5.5% 1.2% 1.8% 8.3% 1.3% Russia India 6.7% 16.0% 1.3% 6.8% 10.0% 8.7% China USA 2.2% 6.4% 15.0% Japan 1.5% 9.0% 1.1% 3.6% 7.6% - WORLD BRICS are now four of the five largest domestic markets Notes: 1. Source: International Monetary Fund, October 2017 2. Source: IATA Air Passenger Market Analysis (August 2017) 12