Avation updates on revenue collection and cash as it manages pandemic impact
In a trading update on its status as of March 31, the commercial aircraft leasing firm said at the outbreak of the pandemic it instituted a programme of support for its airline customers, offering short-term interest-bearing deferrals for portions of their rent in the form of loans. The firm said the cashflow impact of this programme has been mitigated by adjusting the amortisation profiles of related financings with the agreement of lenders and a US$10.5mln equity raise in March.
To date, the company said it has provided support to 14 of its airline customers with agreements to defer a total of US$25.9mln of rent, adding that the impact on cashflow has been mitigated by secured lenders agreeing to reschedule US$32.7mln of loan amortisation payments.
Meanwhile, the company said revenue collection has been “challenging” due to the disruption caused by COVID-19, reporting that for the quarter to March 31, it achieved an overall cash collection rate of 71% across all of its leases, a six-fold increase over the six months to December 31, 2020, while revenues for the quarter came in at US$91mln.
Avation also said it is continuing to manage its liquidity carefully, reporting total cash of US$122.4mln at the end of March, adding that its cashflow has improved in the first quarter of 2021 compared to the last six months of 2020.
In terms of its leases, the company said its weighted average remaining lease term is 6.4 years with total future minimum lease payments receivable under non-cancellable leases at around US$749mln.
Looking ahead, Avation said it expects to receive a distribution from its claims against Virgin Australia following the airline’s voluntary administration, and that it is actively re-marketing a number of aircraft for sale or lease.
The firm also said it expects to manage its liquidity through a combination of aircraft sales and issuing new secured debt and/or equity, adding that to support customers it may seek further deferrals of loan amortisation payments where collection for the related aircraft are not sufficient to cover existing debt service.
“The Executive team have worked tirelessly with the airline customers to manage the collection of revenue as well as remarketing returned aircraft. Rent collections have improved compared with the prior half year. The Company has continued to reduce leverage by lowering net debt by US$51m in the quarter ending Mar 31, 2021. Management is optimistic that as the pandemic recedes the Company will be well situated to take advantage of the recovery in the airline industry”, Avation’s executive chairman Jeff Chatfield said in a statement.
Shares in the company were 2.8% lower at 106p in early deals on Wednesday.