LONDON – Today, international aircraft leasing company Avolon issued an update regarding their Q2 business plan regarding its liquidity and fleet metrics.
The company stated that its liquidity for the Q2 of this years is in a strong position as total liquidity (including unrestricted cash and undrawn secured warehouse facilities) ar in the excess of US$bn.
Avolon’s capital strength was further enhanced in Q2 with a 34% reduction in near-term capital commitments to the end of 2021, resulting in a year to date cumulative 52% reduction in capital commitments in the 2020-2023 timeframe.
Other Liquidity Updates
The other most important liquidity updates concern the opportunistic buyback of US$639 million of Avolon senior unsecured notes maturing between 2021-2024, further reducing near-term debt maturities.
In addition, between 30 June and 3 July, Avolon received aggregate payments of US$47m relating to the payment of outstanding trade receivables or deferred rental balances as at quarter-end and it stated that 12 of its customers were due to start repayments and 7 of these managed to pay all the amount and 5 have fallen.
Q2 Fleet Metrics Updates
Avolon says, in the paragraph regarding fleet updates, that they canceled commitments to acquire 27 B737MAX aircraft in the 2020-2022 timeframe, in addition to the 75 B737MAX aircraft canceled in Q1.
It also stated that it removed the commitment to acquire 1 A330neo aircraft due to be delivered in 2022 and deferred 3 A320neo family aircraft from 2020/21 to 2022; in addition, it delivered 3 new aircraft and transitioned 4 aircraft to follow-on lessees.
Finally, the company sold 10 aircraft during the quarter including 1 managed aircraft (5 of these aircraft were sold to the Sapphire 2020-1 vehicle) and executed a total of 16 lease transactions in the quarter comprising new aircraft leases and lease extensions.
Furthermore, it confirmed that it owned and managed a fleet consisting of 547 aircraft at the end of Q2, and had total orders and commitments for 277 new technology aircraft and a total of 145 airline customers in 62 countries.
Statements from Avolon CEO
Dómhnal Slattery, Avolon CEO, commented, “Q2 was a challenging period for the aviation sector as COVID-19 impacted the industry on an unprecedented global scale, bringing with it continued uncertainty around the pace and timing of a recovery.”
“The months ahead will be difficult, but we have the experience and balance sheet to manage through these headwinds.”
He also stated, “In Q2 we continued to reinforce our strong capital position and have maintained over US$5 bn of total liquidity through the first half of this year. Decisive measures to strengthen our capital position included the opportunistic buyback of US$639m of our unsecured bonds at a discount to par, in so doing reducing our near-term debt maturities.
“More significantly, we have reduced our near-term commitments by over 140 aircraft since the start of the year. These actions provide us with the capital strength to manage through this market backdrop and to support our customers through the recovery,” added the CEO.
History of Avolon
Avolon is an aircraft leasing company based in Dublin, Ireland capital city. It was founded in May 2010 by Dómhnal Slattery, and a team from RBS Aviation Capital with initial capital of US$1.4bn.
The equity commitment of US$1.4 billion was from four leading international investors: Cinven, CVC Capital Partners, Oak Hill Capital Partners, and the Government of Singapore Investment Corporation.
Between 2010 and 2014, Avolon also raised US$6.1 billion in debt from the capital markets and a range of commercial and specialist aviation banks including Wells Fargo Securities, Deutsche Bank, BNP Paribas.
Avalon Goes Public
In 2017, Avolon entered the public debt markets and raised a total of over US$9bn in debt finance. In November 2018, Avolon announced that Japanese financial institution, ORIX Corporation had acquired a 30% stake in the business from its shareholder Bohai Capital, part of China’s HNA Group.
In April 2019, Avolon announced it had raised US$2.5bn of additional unsecured debt which resulted in an investment-grade credit rating from Fitch, Moody’s, and S&P Global.