Avolon has reported an $83 million loss for the first quarter (Q1) of 2021 as lease revenue declined to $470million from $644 million a year ago.
The leasing company ended the quarter with $7.1bn of total available liquidity, including $2.2bn of unrestricted cash and $4.8bn of undrawn debt facilities. During the period, Avolon raised $1.5bn of senior unsecured notes at historically low coupon rates of 2.125% and 2.75% for 2026 and 2028 maturities respectively; and ended the quarter with a secured debt to total assets ratio of 23%, and $17.4 billion of unencumbered assets.
Avolon has an owned and managed fleet of 578 aircraft, with total orders and commitments for 262. The average age of its owned fleet is 5.4 years with an average remaining lease term of 6.7 years.
During Q1, Avolon executed a total of 31 lease transactions in the quarter comprising new aircraft leases, follow-on leases and lease extensions; and entered into Letters of Intent for the placement of 27 owned aircraft. The lessor delivered a total of eight new aircraft to six customers and transitioned three aircraft to follow-on lessees.
Also during the period, Avolon agreed an option to defer 34 single aisle and three twin aisle orderbook commitments from the 2022/23 period to 2025 and beyond.
“While the recovery continues to be uneven, the worst effects of the pandemic on aviation are behind us,” says Dómhnal Slattery, Avolon CEO. “As we move towards summer, it is clear that the recovery of the sector is firmly underway across the globe. We are seeing definitive signs that demand is increasing in the US and Chinese domestic markets – the two largest domestic markets in the world – with air traffic numbers in those markets projected to reach pre-pandemic levels over the coming months.”
“The increase in domestic air travel demand and rollout of vaccine programs across the globe will continue to fuel the recovery. As we move into the second half of this year, we expect a material uptick in air travel in domestic markets, followed by intra-regional recovery, with the sector to experience a more substantial global recovery from 2022 onwards.
“As the recovery takes hold there will be more growth opportunities in the market. Avolon’s strong liquidity position, coupled with our low leverage and minimal near-term debt maturities, means we are well placed to take advantage of such opportunities,” he says.