Avation PLC (LSE:AVAP) has noted news that Virgin Australia has filed for voluntary administration, though it continues to operate flights.
The AIM-quoted plane leasing firm has 13 aircraft with Virgin Australia, though, it described the entry into voluntary administration as a procedural step to enable a sale of the company, or a restructuring and refinancing.
“Avation is aware of reports that there are 10 or more interested buyers for Virgin Australia and/or investors,” the company said in a statement.
READ: Avation can operate ‘for an extended period’ during pandemic
It pointed out that “both State and Federal Governments in Australia have made statements about the necessity for a second locally based airline to service Australia with domestic and international routes.” The administrator has guided that the process is likely to take "two to three months".
Avation has eleven ATR 72 aircraft operating under lease to Virgin Australia, two of which are subleased to and operated by a third-party airline. The UK company also provides two Fokker F100 jet aircraft under finance lease to Virgin Australia.
Regional routes to recover first
In a separate statement, Avation noted an answer to a question it received from an analyst and highlighted that the majority (about 63%) of its leased fleet operate on domestic or regional routes.
Avation said its management is of the opinion that domestic and regional will be the first sector of air travel to recover from the movement restrictions and resulting reduction in demand.
It also acknowledged that has 48 aircraft under lease to airlines - in Europe, Latin America, Asia-Pacific and Australia - and many of them have had operations materially impacted by government decrees limiting movement in response to coronavirus (COVID-19).