Avolon, the international aircraft leasing company, has reported a slight fall in lease revenue for the second quarter (Q2) of 2021 to $610 million from $625 million in the prior-year period, registering a net income of $64 million compared to a $72 million prior-year loss.
Rating agencies Moody’s and Fitch improved Avolon’s credit outlook to Stable in the quarter.
Avolon’s total available liquidity remained relatively stable at $6.6 billion at end of Q2, including $1.8 billion of unrestricted cash and $4.8 billion of undrawn debt facilities. The leasing company ended the quarter with a secured debt to total assets ratio of 22%, and $17.3 billion of unencumbered assets.
At the end of the quarter, Avolon’s owned and managed fleet totalled 581 aircraft, with total orders and commitments for 256 new technology aircraft. The average age of the owned fleet was 5.5 years with an average remaining lease term of 6.8 years.
During the reporting period, Avolon executed a total of 48 lease transactions comprising new aircraft leases, follow-on leases and lease extensions; sold three aircraft in the quarter and entered into Letters of Intent for the sale of 12 aircraft.
Avolon delivered a total of eight new aircraft to six customers and transitioned five aircraft to follow-on lessees.
Also during the quarter, as previously reported, Avolon placed the world’s largest zero emissions eVTOL aircraft order and, through its affiliate Avolon-e, became a launch customer for Vertical’s VA-X4 with a commitment for up to 500 electric aircraft valued at $2 billion. Avolon will join Microsoft, Rolls-Royce, Honeywell and American Airlines as equity investors in Vertical.
Dómhnal Slattery, Avolon CEO, commented: “We have passed the inflection point and the recovery in global aviation is underway. However, as we have guided previously, the recovery will be uneven across different regions and markets with the pace of vaccine roll-out being the springboard for the return to air travel. While we remain cautious, the scale of the increase in demand in the US over the last quarter, and the pace of vaccination programmes globally, underscores our confidence in a continuing recovery through the remainder of this year.
Reflecting the recovery, many of the key operational and financial metrics within our business continued to trend positively during the second quarter. We are seeing increased aircraft demand, improved traffic levels and fewer airlines in restructuring processes. As we work through the second half of the year and see increased activity among our airline customers, our expectation is that the sector will be strongly positioned to perform in 2022.”
Avolon has also announcement the retirement of John Higgins, President and Chief Commercial Officer and Tom Ashe, Chief Operating Officer, both founding members of the company, who will retire from the business on October 15. Effective today, Andy Cronin assumes the title of President of Avolon in addition to his role as Chief Financial Officer and Paul Geaney is appointed Chief Commercial Officer.
“On behalf of the Board and the entire Avolon team, I would like to thank John and Tom for the extraordinary contribution they have made to the company over the past 11 years,” Slattery commented. “They have been central to the journey we have made from a start-up in 2010 to being the world’s third largest aircraft lessor today.”
As COO, Tom Ashe led Avolon’s operating and risk management activity from a zero start in 2010 to today’s balance sheet of over $31bn in assets. This included the successful integration into Avolon of the CIT and HKAC lessor platforms.
As CCO, John Higgins led Avolon’s commercial interactions with the global airline community, the OEMs and the aircraft investor markets which has seen Avolon acquire and trade over 1,300 aircraft since the business was launched. John also sat on Avolon’s Board during the completion of a number of complex cross-border M&A transactions and the successful IPO of the company on the NYSE in 2014.
“Their contribution to our success can be measured not only in the financial and portfolio metrics of our business but also in the strength of the culture which we have built and the incredible pool of talent which we have nurtured and developed,” added Slattery. “Fortunately, their three decades of aircraft leasing experience and insights will not be lost to the business as they will continue to be available to Avolon’s Board and senior management on various projects over the coming years.”
John Higgins commented: “We launched Avolon in 2010 on the back of huge ambition but never contemplating that within ten years we would have built a top three global lessor. That achievement is testament to the potent combination of so many incredibly gifted and committed colleagues, the visionary and ambitious shareholders who have supported the business and a culture which promotes the collective over the individual. I am more optimistic and excited about Avolon’ s future now than I was when we first started.”
Tom Ashe commented: “I am so proud of what Avolon has achieved since our foundation and to have been part of that incredible journey. I am so fortunate to have worked with so many remarkable colleagues and friends and I leave Avolon secure in the knowledge that its people remain its greatest strength. I have no doubt the energy, talent and ambition of this team will drive the business to achieve even more in the decades ahead.”