Avolon reports a 43% increase in 2014 Adjusted Net Income

Dino D'Amore
By Dino D'Amore March 3, 2015 15:02

Avolon reports a 43% increase in 2014 Adjusted Net Income

Avolon announced its total revenue increased by $156 million, or 35%, to $606 million for 2014 full year compared to $450 million for 2013. Adjusted Net Income increased by $54 million, or 43%, to $179 million for the full year compared to $125 million for the prior year. Net Income for the 2014 full year was $91 million compared to $113 million in 2013.

Avolon posted a 282 basis point increase in Adjusted Return on Equity to 12.5% (Return on Equity of 6.4%) and ended the year with undrawn debt of $1.2 billion and reduction in average interest rate by 60 basis points to 3.8%.

Aircraft Net Book Value at the end of 2014 was $5,607 million, an increase of $1,347 million or 32% on 2013.  Total debt at the end of 2014 was $4,548 million. At the year-end, Avolon also had $1,176 million of undrawn debt facilities. The weighted average interest rate of outstanding debt at the end of December was 3.8% and the weighted average remaining debt maturity was 4.6 years.

The lessor delivered 41 owned and managed aircraft in 2014, and sold nine aircraft recording a total gain of $64 million. The average age of its owned fleet is 2.5 years while average remaining lease term is 7.1 years.

Avolon reports that all deliveries for 2015 have been placed and there has been sustained progress in aircraft trading activity year-to-date. There has been a 69% year-on-year increase in total commitments to $6.6 billion at end of 2014 providing substantial ‘locked-in’ growth for the business in years ahead, Avolon stated.
Its current expectation for 2015 is to deliver $1.6 billion of aircraft commitments and $700 million of aircraft trading volume – delivering an adjusted Return on Equity of 14.7% to 15.0%1 or a Return on Equity of 12.8% to 13.1%.

“Avolon delivered a strong performance against key financial and operating metrics in 2014,” said Dómhnal Slattery, CEO of Avolon. “Revenue increased 35% year-on-year and our adjusted net income increased 43%. The strength of this performance is due to the strong growth in our fleet, our reducing cost of funding balanced origination model and consistent ability to deliver trading gains underpinned by what we believe is the industry’s leading risk-management system.”

“At the end of 2014, the embedded market value in our fleet, according to independent industry appraisers, was $568 million. This significant premium highlights the intrinsic value of the Avolon business and reflects our industry leading aircraft portfolio, our ability to acquire and trade assets at attractive prices and our robust underwriting criteria and asset risk management processes.”

“We are excited about the prospects for our business. We believe we have the right team and right business model, underpinned by a best-in-class risk management system, to continue to deliver superior growth with lower risk, which will in turn drive returns for our shareholders.”

Dino D'Amore
By Dino D'Amore March 3, 2015 15:02