Via SGXNET and RNS
AVATION PLC
("Avation" or "the
Company")
TRADING
UPDATE
Avation PLC (LSE: AVAP), the
commercial passenger aircraft leasing company, provides the
following trading update as of 24 May 2024:
The Company expects to report a
profit for the year ending 30 June 2024, which is significantly
ahead of current market expectations.
Fleet
Avation's fleet comprises 34
aircraft leased to 16 airlines in 14 countries. The fleet includes
19 ATR turboprop, 13 narrowbody jet and 2 widebody jet aircraft. As
of 30 April 2024 the average age of the fleet was 7.2 years and the
average remaining lease term is 4.3 years
All aircraft are currently leased
with the fleet currently generating total monthly lease rentals of
US$7.9 million which has increased due to fact that the fleet is
now fully utilized.
Orderbook and Purchase Rights
Avation has placed orders for 12
units of ATR 72-600 aircraft. These are a key component of
Avation's ten-year low carbon new technology strategy.
The first two aircraft in the series
are due to be delivered in Q4 2024 and Q1 2025. The Company has
agreed to sell these two aircraft on delivery at a profit, that
will be recognised in FY2025. Total net sale cash proceeds
less the final purchase price instalments due to the manufacturer
on delivery are around US$10 million. Furthermore, ten more
ordered aircraft are due to be delivered between Q2 2025 and Q2
2028.
Following the exercise of purchase
rights for the ten aircraft, Avation was granted six additional
purchase rights and the expiry date for all 24 remaining purchase
rights has been extended to June 2034. Avation believes that
these purchase rights have significant value. The Company
uses the Black-Scholes pricing model to value aircraft purchase
rights. The pricing model is volatile and sensitive to
changes in underlying asset valuations, interest rates, time to
expiry and other inputs. At current market conditions the estimated
purchase rights value is US$115m (unaudited).
Market Environment
According to IATA, passenger air
travel grew at 13.8% in the year to 31 March 2024.
International travel is showing particularly strong momentum with
18.9% year-on-year growth in revenue passenger kilometres. At
the same time, supply chain constraints have slowed new aircraft
deliveries. IATA expects around 1,600 new aircraft deliveries
in 2024, equivalent to 4.6% of the global fleet. This
compares to a fleet renewal rate of 5.8% in 2018.
This market backdrop has been
supportive for aircraft valuations and lease rates over the last
year with Avation seeing positive trends for both new and
second-hand aircraft.
Debt and liquidity
Avation continues to rapidly
de-lever its balance sheet. The Company has paid down secured
loans by US$37.2 million and has repurchased US$18.0 million face
value Avation Capital S.A. Senior PIK Toggle Notes due 2026 in the
10-month period ended 30 April 2024. The Company has also
issued prepayment notices to repay three secured loans with a total
outstanding balance of US$36.9 million (at 30 April 2024).
The loans will be repaid before 30 June 2024.
The Company continues to focus on
opportunities to reduce and rearrange the mix of secured and
unsecured finance.
Avation has continued to make good
progress in recovering Covid 19 arrears. Rent arrears and
other customer receivables (excluding maintenance reserve arrears)
have been reduced by around US$18.7 million since 30 June
2023. The collection rate for rent is around 105% for the 10
months ended 30 April 2024. Current total cash balances are
US$141.7 million.
Avation's Executive Chairman, Jeff
Chatfield said: "The Company is at a transition point in terms of
improving shareholder returns alongside cash flow generation and
growth. We are confident of improving returns to shareholders by
carefully optimising the mix of sources of finance available to the
Company and are finding asset backed financiers to be extremely
constructive."
-ENDS-
Enquiries:
Avation PLC - Jeff Chatfield,
Executive
Chairman
+65 6252 2077
Avation welcomes shareholder
questions and comments and advises the email address for questions
is: investor@avation.net
and the Company provides an investor Q & A
during the conference call associated with release of results. The
head office telephone number is +65 6252 2077.
Notes to Editors:
Avation PLC is a commercial
passenger aircraft leasing company, headquartered in Singapore,
owning and managing a fleet of widebody, narrowbody jet and
turboprop aircraft which it leases to airlines across the world.
The Company's customers include 16 commercial airlines in 14
countries. Avation's fleet of aircraft is currently fully leased
and utilised. The Company is listed on the London Stock Exchange
with ticker AVAP.L, more information on Avation is available at
www.avation.net.