Avation PLC (LON:AVAP) has delivered and sold a new Airbus A321-200 aircraft to VietJet Air.
It is the fourth sale and delivery of an order for six new A321-200 aircraft to VietJet Air.
The high-flying commercial passenger aircraft leasing company, which last week revealed an approach from a party interested in buying its current portfolio of ATR turbo propeller aeroplanes, said the aircraft was delivered to VietJet Air fresh out of the Airbus production facility in Hamburg, Germany.
The aircraft has been sold by the company with the lease in place to a Chinese lessor. Avation's rationale for the sale is both favourable economics and the management of concentration risks.
The Avation business model is rather like the one employed by property firms, in that it buys assets and then leases them out, leaving the customer to handle maintenance.
Avation typically finances its aircraft acquisitions using 75% senior, secured bank debt. A typical plane might be leased on the basis of repaying back to Avation around 144% of the acquisition price over 12 years of a typical contract.
Even when that lease is up, the plane can then be leased out for another 12 years, albeit at lower rate than a brand new airliner.
Avation mitigates the risk posed by a sharp rise in interest rates by borrowing over the term of the lease, rather than over two or three years and constantly refinancing.
Shares in Avation were up 2.8% on the news in late morning trading.