Singapore-based lessor Avation in considering the acquisition of widebody aircraft as part of its ongoing fleet diversification strategy.
In the 12 months to 30 June 2017 Avation added four A321 aircraft on lease to Vietjet and sold two mid-life A321s, another A321 of unspecified age and six ATR72 turboprops.
Although the lessor acknowledges that widebody aircraft “may have a risk profile which is more exposed to technology change factors” than narrowbodies and regional aircraft, it says it will consider their purchase in order “to build a diversified portfolio of aircraft”.
At 30 June its portfolio comprised 33 Airbus A320-family, ATR72 and Fokker 50 aircraft, with two ATR72s scheduled for delivery in the second half of this year.
Following the reporting period, in August, Air Berlin announced insolvency and consequently defaulted on a lease with Avation for one A320.
The lessor says it hold “substantial” security deposits and maintenance reserves as collateral for Air Berlin’s lease obligations and expresses confidence in finding a new home for the aircraft.
“Avation is liaising with Air Berlin and various third parties that have expressed interest in acquiring parts of the Air Berlin business and/or leasing this aircraft. The Airbus A320 aircraft is one of the most popular commercial aircraft and Avation expects the prompt transition of this aircraft to another airline,” it says in a statement.
During the year to 30 June Avation lowered its weighted average fleet age from 4.2 years to 3.3 years due to sale of older aircraft and the transfer of others onto finance leases, which cover seven aircraft in its portfolio.
Pre-tax profit increased 18% to 21.4 million while operating cash flow grew by almost a fifth.
Net cash generated moved from negative $60 million to positive $39 million, mainly due to income from the sale of aircraft.
Through 2016/17 Avation lowered in loan-to-value ratio from 74% to 72%, although its weighted average cost of secured debt increased from 4.3% to 4.5%.
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