Avolon has reported first quarter profits that are 13% down on the same period last year and it has received requests for payment relief from more than 80% of its current owned and managed customer base.
These lessees account for more than 90% of annualised contracted rental cashflow of the current owned and managed fleet and have taken a number of forms including, requests for short term rent deferrals for part or all of monthly rental for a specified period of time.
“As at 31 March, Avolon was engaged in active dialogue with its customer base and had agreed a number of rent deferral arrangements for an average of three months. It is expected that some form of short term rental deferral arrangement will be agreed with a majority of our customers,” the firm said in a statement accompanying the results.
Dómhnal Slattery, Avolon chief executive said that while Avolon entered 2020 in a strong position, the severe impact of COVID-19 meant the firm has reduced its near-term capital commitments, re-aligning its orderbook with the new market outlook, and enhancing its liquidity position by drawing down on our unsecured revolving credit facility.
“Additionally, the prudent management of our balance sheet over the last number of years – specifically in increasing our unencumbered assets and operating with minimal near-term debt maturities – means we are well positioned for the medium-term.
Looking ahead, the COVID-19 global pandemic will materially reshape the commercial aviation industry for the foreseeable future. Uncertainty remains as to the length of this crisis and we expect that it will likely be some time before air traffic returns to more normalised levels. We remain confident in the ability of our team to navigate the current environment, and the resiliency of the aviation industry to recover,” said Slattery.
During the quarter Fitch Ratings, Moody’s Investor Service, S&P Global and KBRA affirmed Avolon’s issuer rating as BBB-, Baa3, BBB- and BBB+ respectively. All four moved Avolon’s rating outlook to negative.