Avation PLC hails improved cash collection rates, higher aircraft valuations and fleet utilization

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Avation PLC (LSE:AVAP) said demand for planes is outstripping supply as air travel continues to recover, with leases signed for 17 of the 20 planes returned following the pandemic.

The remaining three aircraft, including two ATR72s and a Boeing 737-800, are currently being marketed and have attracted interest from customers to lease or purchase, with all to be completed by the end of December, said the company said in a statement Friday.

At the end of its financial year on June 30, the London-listed company said it had a commercial aircraft fleet of 39 planes which are leased to 17 commercial airlines in 14 countries, with two more planes on order. and long-term purchase rights to another 28 fuel-efficient ATR72 aircraft.

Avation said it was conducting a fleet valuation review, having taken a cautious approach during the pandemic and twice annually written down the value of its fleet.

“We believe aircraft valuations will trend higher as air travel recovers,” Executive Chairman Jeff Chatfield said.

He said the airline industry “is experiencing a rapid recovery with activity levels from most of our airline customers close to and in some cases above pre-COVID levels.”

“Results for the year should reflect that the company has successfully weathered the pandemic and is experiencing improved cash recovery rates, increased aircraft valuations and fleet utilization.”

Cash recovery rates as of May 31, 2022 were 105%, compared to 70% a year earlier, with total cash and bank balances of $118.9 million, including restricted cash at the end of the year. ‘year. The repayment of $55.6 million in secured loans over the past six months was also reported.

Chatfield said “significant revenue” is also expected in the coming financial year from aircraft sales, refinancing of existing aircraft, distributions from the administration of Virgin Australia (ASX:VAH) as well as cash flow from operations.

“The company believes the market has now returned to a position where demand for aircraft exceeds supply. The current aircraft shortage is supported by rising passenger numbers, fewer aircraft in the global fleet than pre-pandemic, the withdrawal from the international fleet of approximately 550 aircraft previously leased to Russian airlines and current levels of aircraft production by major manufacturers which are significantly lower than before the pandemic.

“The company both improved its strategic position by transitioning aircraft to the ground, maintaining cash and reducing debt during the year.

“The company is well positioned to take advantage of the increased demand for aircraft in an aviation sector that will move towards a more sustainable, low-carbon fleet.”

More than half of Avation’s fleet is made up of ATR72s and Airbus A220s, which it says are “class leaders” in fuel efficiency and emissions.

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