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Avation continues with fleet expansion after record year

Snapshot

  • Leases commercial passenger aircraft to global airlines
  • Portfolio of 47 aircraft with 17 airline customers
  • Record profits and revenue in last year's results
airbus a220-300

Quick facts: Avation PLC

Price: 269.5 GBX

LSE:AVAP
Market: LSE
Market Cap: £169.27 m
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What Avation does

Avation PLC (LON:AVAP) specialises in leasing commercial passenger aircraft to various airlines across the world.

Listed on the main board of the London Stock Exchange, the company’s customers include Flybe, Virgin Australia, Thomas Cook, Air France, easyJet, Eva Air, Philippine Airlines, Air India, Vietjet Air, Fiji Airways, Mandarin Airlines, Cebu Pacific, Garuda Indonesia, Galistair, airBaltic and Danish Air Transport.

The company’s current fleet is comprised of 47 aircraft including Boeing and Airbus models.

 

Inflexion points

• The group repossessed two Airbus A321 aircraft that it had leased to collapsed travel group Thomas Cook, which are anticipated to be in high demand when remarketed

• S&P Global Ratings upped its rating to BB- and raised the issue rating for $350mln of 2021-maturing bonds issued by Singapore-based Avation's wholly-owned subsidiary, Avation Capital, from B+ to BB-

• The company said in November it is considering green finance opportunities for growth within its lower emissions aircraft fleet

• In June it struck a deal to use GE’s AirVault Asset Transfer System to store and manage the records of its fleet of aircraft

• In mid-May, Avation delivered its sixth new Airbus A220-300 aircraft to Latvian based carrier airBaltic as part of a leasing deal

• Avation added Cebu Air, the largest domestic airline in the Philippines, to its growing roster of customers in May

• The group recently acquired a Boeing 737-800 Next Generation (NG) aircraft, which is currently on lease to Indonesian airline Garuda until mid-2022

 

How it is doing

In its full-year results to June 2019 lease rental revenue was up 21% at US$117.7mln, giving net profit of US$25.7mln, up 28%. Both were records.

The total payout rose 45% to 10.5 cents, putting Avation on a dividend yield of 3.1%.

The company’s fleet assets were worth US$1.27bn at the year-end, a rise of 22%, while the average weighted cost of its debt fell to 4.6% from 5% this time last year.

It added 12 new aircraft to its roster during the year, while offloading the aforementioned two narrow-bodied aircraft. It means the fleet, as of September, numbers 48 with an average age of 3.4 years and weighted average lease term of 7.5 years, down from 7.7 years.

 

What the boss says: Richard Wolanski, finance director

"We have got short-term visibility on new aircraft delivery and new customers, which is key to our business."

"We are seeing a repeated growth performance than we saw in 2019."

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Full interview: Avation PLC soaring as it reports record revenue, profit and...

Avation PLC's (LON:AVAP) Richard Wolanski caught up with Proactive London's Andrew Scott following the release of the aircraft leasing company's full year results to June 2019. The firm achieved both record revenues and profits and investors were rewarded with a bumper dividend pay-out too.

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