Avation PLC (LON:AVAP), the commercial passenger aircraft leasing company saw half-year revenues hit a record level in the back end of 2019.
Revenue in the six months to the end of December surged to US$67.61mln, up from US$58.73mln the year before.
Profit before tax more than tripled to US$45.21mln, up from US$14.22mln as the company booked a one-off unrealised gain of US$36.98mln on aircraft purchase rights relating to ATR72-600 aircraft. Even excluding this one-off item, the leasing business continued to grow.
The interim dividend has been nudged up by 5% to 2.1 cents from 2.0 cents in 2018.
Net asset value per share increased by 15% to US$4.29; Avation’s shares currently trade at 256p.
Strategic review ongoing
The company, which last month initiated a strategic review after it was approached by a potential purchaser, said a number of other parties have approached it since the review was announced.
The board believes that the company’s value is above the net asset value of the company, taking into account the potential realisable value of its fleet, the value of its leasing platform and experienced employees, its Singapore tax domicile and aircraft leasing scheme, the scale and diversification benefits that would accrue to a purchaser who is in the same industry, plus the usual bid premium expected in takeover situations.
“Upon completion of the strategic review and formal sale process the board will consider the recommendations and provide further comment,” said executive chairman, Jeff Chatfield.
"During the period, Avation repossessed two Airbus A321 aircraft from Thomas Cook and transitioned the aircraft to a new lessee. While the airline sector performed profitably as a whole, 2019 saw a record number of airline insolvencies. Avation's limited exposure to Thomas Cook and lack of exposure to other airline failures results from increased scale and diversification and the application of stringent investment criteria,” Chatfield added.
Despite the tricky period for the airline industry, Avation’s customer base continued to expand during the period.
"Avation has a strong cash position with four new aircraft expected to be added to the fleet through deliveries to Braathen's and US Bangla between now and 30 June 2020. The company believes it has sufficient liquidity to fund further fleet growth which will be sourced from the order book for ATR-72-600 aircraft and through aircraft acquisition," Chatfield concluded.