BOC Aviation's (HKG:2588) increased earnings should keep its leverage stable amid its fleet expansion, S&P Global Ratings said in a Monday release.

Delayed aircraft deliveries in 2024 resulted in lower-than-expected capital expenditure, contributing to a modest decline in the company's leverage, S&P said.

However, the company's use of purchase-and-leaseback (PLB) finance lease arrangements has helped bridge its capital expenditure gap amid delayed deliveries, helping to boost interest income and offset lower lease rental income, S&P said.

The rating agency expects the company to continue using PLB transactions to meet its capital expenditure targets, which could notably increase debt.

However, projected revenue growth driven by a rise in lease rate factor, an expanding fleet, and better interest income should keep credit metrics stable, S&P said.

The aircraft leasing company will see a rise in its lease rate factor due to continued growth in Asia-Pacific air traffic and airlines' increased reliance on lessors amid supply chain issues, the rating agency said.