Avation PLC (LON:AVAP) has signed two purchase and lease agreements for new Airbus A321-200 aircraft with Vietnamese carrier Vietjet.
The aircraft will seat 230 passengers, which is the highest density option for the Airbus A321-200, and are expected to be used on Vietjet’s expanding route network, Avation noted.
“The long term operating lease terms are typical for an aircraft of this type,” it added.
Avation’s business model entails acquiring aircraft and then leasing them out; the skill comes in sourcing the finance, the right aircraft and mitigating the risks involved with the transaction.
Avation finances its acquisitions using 75% senior, secured bank debt. A typical aeroplane might be leased on the basis of repaying back to Avation around 144% of the acquisition price over the 12 years of a contract.
Vietjet is one of Avation’s regular customers, having taken out leasing agreements on a monthly basis since July, while it also leased an Airbus A321 from Avation at the end of May.
Shares in Avation were up 2.1% at 149p in early trading.