04 May, 2022

Avolon reports increased revenue and cash collections as borders reopen

Avolon, the international aircraft leasing company has just released details of its performance over the first quarter of this year which shows it had delivered $658 million of lease revenue and generated $320 million of net cash from operating activities.

The firm adjusted Net Income of $80 million excluding the impact of Russia, raised $300 million of drawn and revolving unsecured debt facilities, bringing total revolving debt capacity to $5.9bn at quarter-end.  This global leasing firm ended the quarter with total available liquidity of $5.4 billion, including $477 million of unrestricted cash and $4.9 billion of undrawn debt facilities;

Fleet Highlights


Owned and managed fleet of 592 aircraft at quarter-end, with total orders and commitments for 240 fuel-efficient, new technology aircraft.  Average owned fleet age of 6.0 years with an average remaining lease term of 6.9 years.  Delivered a total of 6 new aircraft to 4 customers and transitioned 11 aircraft to follow-on lessees.  Executed commitments for the sale and leaseback of 16 aircraft. Sold 3 owned aircraft and entered into letters of intent for the sale of a further 35 owned aircraft.
 

2022 Q1 and Russian situation impact


As disclosed in Q1 update, as of 31 March, Avolon had 10 owned aircraft located in Russia representing less than 1% of Avolon’s portfolio value net of security deposits and maintenance reserves;
 
During the quarter, Avolon recognized an impairment of $304 million in respect of our exposure to Russia, reducing the carrying value of the 10 owned aircraft to zero.  This impairment is partly offset by the net release of $43 million in other lease associated balances resulting in a $261 million net impact to the income statement; and as a result of this impairment, Avolon is reporting a net loss of $182 million for the quarter, and an adjusted net income, excluding the impact of Russia of $80 million for the period.

Dรณmhnal Slattery, Avolon CEO, commented: “As we reflect on our performance during the quarter, first and foremost our minds are with the people of Ukraine and those – both at home and abroad – that are impacted at this time. We are hopeful for a swift and peaceful end to the conflict.

 2022 FIRST QUARTER | FINANCIAL HIGHLIGHTS

 

INCOME STATEMENT ($ MILLION)

Q1 2022

Q1 2021

CHANGE

Lease Revenue

658

470

188

Net Loss

(182)

(83)

(99)

Adjusted Net Income/(Loss) (excluding Russia)

80

(83)

163

 

BALANCE SHEET ($ MILLION)

Q1 2022

FY 2021

CHANGE

Total Available Liquidity

5,372

6,256

(884)

Total Assets

30,521

30,984

(463)

Secured Debt / Total Assets

20%

20%

-

Net Debt to Equity

2.4x

2.4x

-

 


Given the impact of sanctions, we are recognising an impairment charge of $304 million in the first quarter in relation to our aircraft which were previously on lease in Russia. While we continue to make every effort to recover these assets and are pleased to have repossessed four aircraft, we are recognizing the full impairment this quarter, putting the financial impact of Russian sanctions firmly behind us.


Despite the headwinds of COVID-19 and Russian sanctions, we delivered our strongest quarterly underlying performance since the onset of the pandemic. Our improved year-on-year performance was largely driven by the rapid reopening of borders in Asia and increased flying globally, which supported a further improvement in the financial health of our customers and resulted in increased cash collection rates. This performance re-affirms the inherent strengths of our business and the absolute resilience of the aircraft leasing model, providing us with confidence in the outlook for the remainder of the year.”

 

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