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RNS Number : 5275S  Avation PLC  15 July 2022

Via RNS and SGXNET

AVATION PLC

("Avation" or "the Company")

 

TRADING UPDATE

 

Avation PLC (LSE: AVAP) provides the following trading update (unaudited) as
of 30 June 2022.

 

Aircraft Fleet

As of 30 June 2022, Avation's commercial aircraft fleet totals 39 aircraft.
Avation's fleet is leased to 17 commercial airlines in 14 countries including
five flag carriers. Avation has two orders and owns a further 28 long-term
purchase rights over ATR72 aircraft.

 

The weighted average age of the aircraft fleet on 30 June 2022 was 5.7 years,
the weighted average remaining lease term was 5.7 years and the total future
minimum lease payments receivable under non-cancellable leases was
approximately US$557 million (unaudited).

 

Avation is in the process of completing the sale of two ATR72 aircraft that
were formerly leased to Loganair. The sale of these aircraft is expected to be
completed during July and August 2022.

 

On 4 March 2022, the Company advised of the completion of a Letter of Intent
to lease an ATR72-500 to a new customer. The lease is signed and the aircraft
is being prepared and is expected to be delivered to the new customer in July.

 

Upon completion of these transactions the Company will have only three
unutilised aircraft remaining from the overall 20 aircraft returned or
repossessed during the COVID-19 pandemic. The remaining three aircraft two
ATR72 and one Boeing 737-800, are currently being marketed and have received
interest from customers to either lease or purchase.  Avation expects these
aircraft will be transitioned or sold prior to the end of the calendar year.

 

Fleet Valuation Review

During the pandemic Avation took a cautious approach and impaired the value of
the fleet in each of the prior two financial years. Avation is of the view
that, following the pandemic as airline travel recovers, there may be a
recovery in aircraft valuations. Avation is conducting a review of the fleet
valuation as at 30 June 2022.

 

Cash Position and Liquidity

As of 30 June 2022, Avation had total cash and bank balances (including
restricted cash) of US$118.9 million (unaudited).  Furthermore, during the
six-month period from 1 January 2022 to 30 June 2022 the Company has repaid
secured loans by $55.6 million (unaudited). The Company confirms that it is
current with all senior loans and that moreover it has extended a warehouse
loan facility maturity date to 30 September 2026. As a result, the warehouse
loan is not considered a current liability at 30 June 2022.

 

The collection rate of cash compared with contracted revenues as at 31 May
2022 was 105% (unaudited compared to 70% in the year ended 30 June 2021).

 

We expect that the Company's cash position and liquidity will be positively
impacted by the settlement of aircraft sales, re-financing of existing
aircraft, collection of the creditor pay-out expected from Virgin Australia
and the continued collection of rent arrears from customers in the first half
of the new financial year.

 

Results Release

The Company expects to release its full year results on or around the 6(th) of
October 2022 with an investor call to be held on the day of release of
results. Specific details of the timetable for the results announcement and
investor call will be provided closer to the date.

 

Positioning towards a Sustainable, Low Emission Fleet

A majority of Avation's fleet are current technology, fuel efficient, low
emission aircraft with ATR72 and Airbus A220 aircraft, class leaders in these
metrics, representing over half the current fleet by number and value. Avation
is gradually transitioning to low CO2 Aircraft Lessor focussing on new
technology aircraft with low CO2 emissions.

ATR have recently announced the introduction of aircraft powered by the new
Pratt and Whitney Canada PW127XT engine which is expected to have 20% lower
maintenance costs, extended time on wing, 3% lower fuel consumption and 5%
more power compared with the existing engine variant. Moreover, the
manufacturer expects that the PW127XT engine will be certified to operate with
100% Sustainable Aviation Fuel ("SAF") from 2025. When using SAF net emissions
of CO2 will be reduced by 80%. In June 2022, ATR and Avation's customer
Braathens Regional Airlines collaborated to enable the first ever flight with
100% SAF in both engines on a commercial aircraft. Avation's future orders
will include this new engine variant or its successors.

Executive Chairman, Jeff Chatfield, said:

"We are pleased to have already transitioned 17 of the 20 aircraft returned as
a consequence of COVID-19. We observe that the airline industry experiencing a
rapid recovery with activity levels of most of our airline clients close to
and in some cases above pre-COVID levels. The results for the year are
expected to reflect that the Company has successfully navigated the pandemic
and is experiencing improved cash collection rates, higher aircraft valuations
and fleet utilisation. The Company expects material receipts in the coming
financial year from sales of aircraft, re-financing of existing aircraft,
distributions from the Virgin Australia administration as well as cashflow
from operations.

"It is our opinion that aircraft valuations will trend upwards as air travel
recovers. The Company believes that the market has now returned to a position
where the demand for aircraft exceeds supply. The current shortage of aircraft
is supported by increased passenger numbers, fewer aircraft in the global
fleet than pre-pandemic, the removal from the international fleet of
approximately 550 aircraft previously on lease to Russian airlines and current
aircraft production levels by the major manufacturers which are materially
lower than pre-pandemic.

 

"The Company both improved its strategic position by transitioning grounded
aircraft, maintained liquidity and reduced debt during the financial year.

 

"The Company is well positioned to take advantage of increased demand for
aircraft in an aviation sector that will evolve into a more sustainable, low
CO2 emission fleet."

 

ENDS-

Enquiries:

Avation PLC - Jeff Chatfield, Executive
Chairman
+65 6252 2077

 

Avation welcomes shareholder questions and comments and advises the email
address is: investor@avation.net

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.

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