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Avation starts strategic review after record year

Snapshot

  • Leases commercial passenger aircraft to global airlines
  • Portfolio of 49 aircraft with 18 airline customers
  • Record profits and revenue in past year
airbus a220-300

Quick facts: Avation PLC

Price: 333.5 GBX

LSE:AVAP
Market: LSE
Market Cap: £209.14 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, 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 49 aircraft including Boeing and Airbus models.

How it's doing

In January, Avation began a strategic review that could result in the company selling itself.

The review will consider multiple options to “maximise value for shareholders” including merger and acquisition activity, sales within the firm’s aircraft portfolio, as well as the sale of the entire company.

Avation confirmed that it was in preliminary discussions with an interested party over a potential sale, although there was no certainty that an offer will be made.

Fleet metrics

In a separate release, Avation also revealed the average fleet age (weighted average inclusive of finance leases) was 3.7 years, with remaining lease term (weighted average inclusive of finance leases) at 7.1 years, while unearned contracted revenue associated with the fleet was US$921mln.

Avation also pointed out that it has 6 ATR 72-600 aircraft on order, with 2 ATR 72-600 aircraft to be delivered to Braathens by March 2020   2; it also has 25 ATR 72-600 aircraft purchase rights, and 1 engine available for lease from mid-January 2020.

The group also said it had has completed the purchase of its first engine, which is now available for lease as a spare engine to commercial aircraft operators. 

The acquired engine is virtually new having only completed 54 hours and is a Pratt and Whitney Canada PW127M.

How it's 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 dividend 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.

What the boss says: Jeff Chatfield, Executive Chairman

"The company believes the line of engine leasing will be modestly accretive to its business and tactically useful in support of its own and its customers' fleets from time to time.

"The Avation marketing team is in the process of establishing marketing plans for engine leasing and establishing the sales and marketing process."

Inflexion points

  • Completion of strategic review and talks over a possible sale
  • Further expansion into engine leasing
  • Fleet continues to grow

 

 

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Watch

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.

on 11/9/19

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