Hopefully my understanding of Avation (LON:AVAP) will assist anyone who may have a passing interest in aircraft leasing and prefer longer term investments... 

Avation's 2017-2018 H1 results are due 26 February 2018. There will be Update Call at 1pm GMT on that day. For the Webcast you can register in advance or on the day. It will also be available for replay on their Website. 

£AVAP are a small aircraft leasing company based in Singapore. They originally started out leasing old Fokker 100's in Australia but then graduated to becoming a major lessor for the highly successful and very much desirable ATR72 series aircraft. The ATR's are a turboprop aircraft for use on domestic and regional routes. The company then went on to lease the narrow-bodied A320's and A321's; there first foray into modern jet powered aircraft. As most readers will perhaps know, these aircraft are primarily for short-medium haul operations. At the end of 2017, Avation entered the twin aisle/wide bodied market with a Boeing B777-300ER and Airbus A330-300. For Avation, a typical ATR72-600 costs $19.8m, An A321 $51.3m, a B777-300ER $152m and a two year old A330-300 is around $93m. These are actual costs and not list prices which will be considerably higher. The difference between list price and actual price is largely accounted for by who the customer is and how many aircraft are being ordered and likely to be ordered in the future. Very few airlines pay anything close to list price.

There are 10 listed independent aircraft leasing companies globally but Avation is the only listed aircraft lessor in the UK which is not ideal. I am ignoring Doric as they are a specialist fund manager with an innovative method of financing A380's. 

The concept of aircraft leasing is quite simple. In practice airlines go to the aircraft manufacturer and place an order. Most of the time it takes 1-5 years before the aircraft manufacturer can start delivering the aircraft. The airline will pay a deposit but as the delivery time approaches they will (50% of the time) find a lessor and the airline will do a 'Sale and Leaseback' (SALB). Thus the lessor (in this case Avation plc) take ownership of the aircraft and agree to lease…

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