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Avation on course for record profits as growth drive continues

In an update at the company’s annual meeting in November, investors were told lease income for the six months to the end of December will be in the order of US$58mln, up 39% year on year

The group's CFO, Richard Wolanski, said the next half year will be the “best first half we’ve ever delivered”

Avation PLC (LON:AVAP) has given an upbeat assessment of its prospects as first-half revenues and earnings are expected to grow strongly.

In an update provided at the aircraft leasing company’s annual meeting in November, investors were told lease income for the six months to the end of December will be in the order of US$58mln, up 39% year on year.

READ: Avation: Aircraft leasing company on course to post record profits

Profitability, meanwhile, is expected to hit record levels, boosted by a trading gain on the sale of a narrow-body aircraft.

New aircraft

The company is also targeting an expansion of its fleet having bought four new Airbus A220-330 planes in December which were then immediately leased to Latvian carrier airBaltic for 12 years.

READ: Avation leases four more Airbus A220-300 planes to airBaltic

This followed closely behind the delivery of two ATR 72-600 planes to Danish Air Transport, both of which are also on 12 year leases.

The ATR turboprop is a key model for Avation, having exercised an option in January to acquire eight more from the manufacturer at the start of 2019, with deliveries scheduled to take place between 2020 and 2022.

READ: Avation exercises options to acquire eight new ATR aircraft

Jeff Chatfield, the company’s executive chairman, added that the company had also maintained its purchase rights and price protection over a further 25 aircraft extending to December 2025.

“We believe that the market for the ATR 72-600 will continue to be strong as the aircraft is the most fuel-efficient aircraft in its class and dominates sales in its market segment,” he said.

CFO says next half year will be “best first half we’ve ever delivered”

Richard Wolanski, the company’s chief financial officer, told Proactive that the next first half is likely to be “the best first half in the history of the company”.

“We’ve gone from a company investing in US$20mln aircraft to being able to invest in US$100mln aircraft…The biggest and best airlines in the world use small, medium and large aircraft ... we now have the ability to deliver all that they require''.

Wolanski adds that the group started the year with revenues of around US$10mln a month, another record for the firm, while also making a material profit from the sale of an aircraft that will be recorded in the profits for the period.

“If a plane that represents half our balance sheet has been sold for a material profit…we want investors to understand that our balance sheet is undervalued”

“If we demonstrate liquidity of the assets and that they’re undervalued, then clearly the share price is significantly undervalued”.

The growth story hasn’t been lost on the market either, with the share price having risen around 11% over the last year.

Avation carries a market cap of around £166mln.

Quick facts: Avation PLC

Price: 187.5 GBX

Market: LSE
Market Cap: £117.51 m

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Avation aims to double the size of its fleet

Avation PLC (LON:AVAP) Finance Director Richard Wolanski explains how the Singapore-based airplane-leasing company is growing at a faster rate than US-based AerCap (NYSE:AER) and Air Lease Corporation (NYSE:AL), and aims to double the size of its fleet.  This week, the company added...

on 05/14/2019

3 min read