Aircraft lessor Avolon boosts profit to record $718m

Aircraft lessor Avolon increased its net profit marginally to a record $718 million (€658 million) last year as its lease revenue exceeded $2.61 billion.

The Dublin-headquartered company said lease revenue rose 2 per cent while net profit was up by less than 1 per cent.

The results followed a positive year in which it hit a "major corporate milestone", said chief executive Dómhnal Slattery, by being upgraded to investment grade by ratings agencies Fitch, Moody's and S&P Global.

During the 12 months to the end of December, Avolon delivered a total of 54 new aircraft and sold a total of 92 aircraft. During the year, 98.9 per cent of its fleet of 925 owned, managed or committed aircraft was in use. The average age of its owned fleet was 5 years with an average remaining lease term of 7 years.

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The aircraft lessor ended the year with $16.6 billion of future contracted rental cashflows and $5.7 billion in available liquidity. Its net debt to equity ratio was static at 2.2 times at the end of December.

Avolon, which also has offices in the US, Dubai, Singapore and Shanghai, is 70 per cent owned by a subsidiary of publicly listed Chinese company Bohai Leasing and 30 per cent owned by a subsidiary of Tokyo and New York-listed Orix Corporation.

Dividend

Having generated $2.1 billion of net cash from its operating activities, Avolon declared a dividend of $285 million at the end of last year.

In 2019, Avolon, the world’s third largest aircraft leasing business, raised $5.1 billion of debt. It also announced it had ordered 140 engines from CFM valued at $2 billion at list prices to power 70 A320neo aircraft.

“Looking ahead, the continued spread of the coronavirus creates an uncertain backdrop for our airline customers. However, in previous periods of dislocation air traffic has proven to be resilient,” Mr Slattery said.

“We have multi-cycle experience, a proven management team and a strong investment grade balance sheet. It is in an environment of uncertainty where this experience matters most,” he added.