I have posted about Avation (LON:AVAP) on several occasions e.g. a post largely about the industry and how Avation sits in that market: https://www.stockopedia.com/co...

Today Avation (LON:AVAP) has issued their interim management update https://www.investegate.co.uk/... which I will come on to a little later.

Looking at the list of RNS's over H2, not a lot appears to have happened (as expected in another post of mine from last September https://www.stockopedia.com/co... ) but in actual fact a lot has been happening behind the scenes.

At the very end of H1 the company acquired a B777 and an A330. This made a huge difference to the fleet asset value but practically no additional revenue due to the timing of the aircraft deliveries i.e right at the end of the financial year.

The company stated maximum net debt to equity ratio is x4 and their minimum EBITDA to interest ratio is x2 with a unsecured to secured debt ratio of 30% (Page 90 http://infopub.sgx.com/FileOpe... However, the credit rating agencies have indicated tighter requirements if Avation are to keep their recently improved ratings, namely less than x1.5 EBIT interest cover and Funds from Operations to debt of >7% to 9%.

I think these credit limits were reached at the end of December 2018 and therefore there were  very limited additions to the fleet in H2; providing the appearance of not a lot happening.

FLEET CHANGES


Over the last year we have had the following fleet additions (costs are my best guess):
* Airbus A330-300 delivered Dec 2017 at a cost of $97.6m
* Boeing B777-300ER delivered Dec 2017 at a cost of $150m
* Bombardier CS300 delivered June 2018 at a cost of $32m
* Airbus/Leonardo JV ATR72-600 x 3 Nov 2017 (1), Dec 2017 (2) Total ATR cost $56.5m

(Already announced but yet to be delivered in 2018/19 is another CS300 and x1 ATR both for delivery in July and another ATR later in the FY.)

So, in actual deliveries that's a total of $336m of new assets compared to $744m last year. I now calculate total NAV for the fleet to be $980m (not 336+744; difference due to depreciation). Thats around a 40% increase!

REVENUE
Of course we are also…

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