Avolon reports annual performance for 2018

Lauren Eldershaw
By Lauren Eldershaw February 13, 2019 16:49

Avolon reports annual performance for 2018

During 2018, Avolon generated lease revenue of $2.6bn, an increase of 10% year on year, with profits up by 30% to $717 million for the fiscal year. Total assets stand at $27.153bn. At year end, Avolon reports that it had $16.6bn future contracted rental cashflows and $5.7bn of available liquidity in unrestricted cash, undrawn revolving credit facilities and undrawn secured and unsecured debt. During 2018, Avolon declared and paid shareholder dividend of US$490 million.

The percentage of Avolon’s secured debt over total assets reduced from 48% to 42% over the reporting period.

Avolon has delivered a total of 33 new aircraft, executed a total of 153 lease transactions and contracted sale agreements for 130 aircraft. The lessor sold 87 aircraft with total proceeds from disposal of property, plant and equipment of US$2.2 billion in 2018 with a further 58 aircraft held for sale at year end, representing US$1.2 billion of aircraft related assets. Fleet utilisation was 99.5% for 2018, with 100% of its committed fleet placed through to the end of 2019 and 80% placed through to the end of 2020.

Avolon also increased its asset management activity with 49 managed aircraft at year end. Avolon’s owned, managed and committed fleet increased by 7% year on year to 971 aircraft at the end of 2018. The owned fleet has an average fleet age of 5.0 years with an average remaining lease term of 6.8 years.

The addition of ORIX Aviation Systems as a new 30% shareholder, with the incorporated a revised governance structure enhancing protections for debt investors, was emphasised as a highlight of the year for the leasing company. The deal accelerated momentum on Avolon’s path to Investment Grade with Fitch placing Avolon on positive outlook and Moody’s upgrading Avolon’s corporate credit rating to Ba1.

Avolon also states that it has consolidated its position as the third largest aircraft lessor with an order for 100 Airbus A320neo family aircraft.

Also in 2018, Avolon established two asset management platforms in partnership with third-party investors: Jade Aviation in partnership with China Cinda Asset Management and the Sapphire Aviation Finance platform. At year-end Jade Aviation had acquired six aircraft from the Avolon fleet; and Sapphire acquired 41 aircraft from the Avolon fleet with the issuance of US$768 million of senior secured notes and a majority equity investment from a third-party investor.

During last year, Avolon doubled the scale of its unsecured revolving credit facility to $2.2 billion, providing total revolving debt capacity of $4.2 billion at year end; and also reduced secured debt by $1.6 billion during the year, increasing unencumbered assets by $2.9 billion to a total of $8.7 billion at year end.

Dómhnal Slattery, Avolon CEO, commented: “2018 represents another excellent year for Avolon during which we successfully executed on a number of key strategic objectives – a testament to the hard work, focus and commitment of the Avolon team. It was a record year for the business in which we generated US$2.2 billion of net cash from operating activities and delivered a 30% increase in profit.
The addition of ORIX as a shareholder, coupled with the increase in our unencumbered assets and reduction in our secured debt, represents significant progress towards securing our Investment Grade rating – a key corporate objective for 2019.”

Lauren Eldershaw
By Lauren Eldershaw February 13, 2019 16:49