REG - Avation PLC - Trading Statement

AvationAnnouncement

24/05/2024 07:45

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RNS Number : 8163P  Avation PLC  24 May 2024

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 (mailto: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.

 

 

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