REG - Avation PLC Avation PLC - AVAW - AGM Statement

AvationAnnouncement

13/12/2022 07:16

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RNS Number : 5098J  Avation PLC  13 December 2022

Via RNS and SGXNET

 

AVATION PLC

("Avation" or "the Company")

 

CHAIRMAN'S AGM STATEMENT

 

Avation PLC (LSE: AVAP), the commercial passenger aircraft leasing company
will hold its Annual General Meeting today in Singapore which will include the
following Chairman's Statement. The purpose of this statement is to provide
investors with an update on current operations for the financial period
commencing on 1 July 2022.

Fleet Update

The Company's strategy is to focus only on new technology low CO2 emissions
aircraft going forward. As at 1 December 2022, Avation's fleet totals 39
aircraft. The average age of the fleet is 6.0 years and the average remaining
lease term is 5.3 years. Avation's customers include 16 airlines in 13
countries. Avation has successfully continued to lease and transition aircraft
impacted by the pandemic since 1 July 2022.

Avation is currently finalising the sale of two ATR 72-600 aircraft previously
on lease to Loganair and an ex-Garuda Boeing 737-800. The Company is also
remarketing an ATR 72-600 formerly on lease to Golden Myanmar Airlines. The
only other unutilised aircraft in the fleet are two ex-Virgin Australia ATR 72
aircraft that may be leased or sold.

The next aircraft scheduled to come off lease is not until September 2023 and
following this the next aircraft to come off lease is not until October 2025.

Avation's major airline customers have increased utilisation of aircraft with
many flying at or close to pre-COVID levels.

Return to Fleet Growth

To facilitate future fleet growth, Avation has two ATR 72-600 aircraft on
order for delivery in April and May 2024. These positions could potentially be
brought forward should customer requirements necessitate this. Avation has
been responding to requests for proposals to finance new aircraft since 1 July
2022 and has also re-initiated the search for opportunistic aircraft
acquisitions from airlines and other lessors.

 

Operational Update

While the return to flying has been embraced by passengers and airlines
Avation notes that there is still significant disruption in respect of
aircraft servicing and repair as workshops continue to be impacted by reduced
personnel levels and the rebuilding of workforces. This has resulted in delays
to the service, repair and movement of aircraft being sold or transitioned by
Avation. The Company expects that these services will gradually improve to
pre-COVID levels during 2023. Debtor collection remains a key focus and
Avation works closely with airlines to ensure operational cashflow is
maintained.

 

Finance Update

Cashflow

Cashflow from operations is expected to improve as the return to normal
trading conditions continues as airlines return to full service. The Company
received an initial distribution of AU$5.5 million from the insolvency of
Virgin Australia in September 2022.

Cash inflows for the reminder of the financial year are expected to be boosted
through the settlement of aircraft sales, further collections from the
insolvency proceedings of Virgin Australia and collections of outstanding
amounts related to rent deferral arrangements put in place during the COVID-19
pandemic.  This includes the scheduled repayment of a US$25.9 million
interest bearing loan to a major customer from January 2023 in equal
instalments over 24 months.

 

Secured Debt

Avation confirms that it is current with all payments to secured lenders and
is in compliance with all financial covenants in place with secured lenders.

Interest from secured lenders to finance the type of young popular aircraft
that Avation's strategy focuses upon has increased, as evidenced by the
refinancing of two Airbus A220 aircraft by the Company in November 2022.

 

Senior Unsecured Notes 2026

On 19 October 2022 the Company launched a conditional tender framework to
support further repurchases of Notes, the Company intends to explore its
ability to retire debt early and at a discount under certain circumstances.
The tender process is ongoing, the Company will provide further information as
the dialogue continues.

 

Outlook

Avation and the airline industry have emerged from the COVID-19 pandemic.
During the remainder of the financial year aircraft sales, collections of
receivables from customers and the insolvency proceedings of Virgin Australia
in addition to cashflow from operations should support opportunities for a
return to fleet growth.

As the impacts of the pandemic continue to be resolved and operations in the
industry return to growth, Avation is optimistic about the long-term
opportunity for air travel particularly in new technology low CO2 aircraft
including the new engine technology ATR 72 turboprop and narrow-body aircraft
sectors. The Company intends to position itself for a return to growth through
opportunistic purchases and deliveries from its orderbook.

 

- 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
62522077.

Notes to Editors:

Avation PLC is an aircraft leasing company, headquartered in Singapore, owning
and managing a fleet of commercial passenger aircraft which it leases to
airlines around the world.

 

More information on Avation is available at www.avation.net
(http://www.avation.net) .

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