Tuesday 23 October 2018

Avolon sees profits soar 59pc after CIT buyout

Avolon CEO Dómhnal Slattery hailed a ‘transformative year’
Avolon CEO Dómhnal Slattery hailed a ‘transformative year’
John Mulligan

John Mulligan

The impact of last year's $10.4bn (€8.4bn) acquisition of CIT's aircraft-leasing business has filtered through to Avolon's bottom line, with the Dublin-based lessor recording a 59pc surge in after-tax profits to $550m (€446m).

Avolon, which was co-founded and is headed by Dómhnal Slattery, said that its revenues jumped 129pc to $2.4bn (€1.9bn) during 2017 as it benefited from the CIT purchase.

Avolon is owned by Bohai Leasing, which is, in turn, 52pc-owned by China's HNA conglomerate.

Avolon did not provide pro-forma details of its 2017 financial performance, but Mr Slattery said the lessor had a "transformative year".

"As we look forward to 2018, we are confident in our business and our growth objective," he said.

"We are a stronger and more strategically relevant business than at any time in our history.

"We have the team, the balance sheet and the aircraft order book to deliver for our customers and all our stakeholders in 2018 and beyond."

The acquisition of the CIT assets propelled Avolon to being the world's third-largest aircraft lessor, after Gecas and AerCap.

Avolon's owned, managed and on-order fleet comprised 908 aircraft at the end of 2017.

During the year, it took delivery of 45 new aircraft and sold 44 jets, including 29 owned aircraft and 15 managed assets.

It ordered 75 Boeing 737 MAX aircraft last year, including 55 MAX 8s and 20 MAX 10s with options for a further 20 MAX 8 aircraft.

The company raised $14.9bn (€12bn) in debt and equity last year, including $9.75bn of debt that was raised on the capital markets.

Mr Slattery was forced last month to defend Avolon's financial foundations as HNA comes under pressure following a multi-billion dollar spending spree in recent years that has seen it snap up stakes in companies from Deutsche Bank to the Hilton hotel group.

A JPMorgan executive claimed last month that Avolon's bond rates were "not competitive" and "unsustainable" because of issues with HNA.

But Mr Slattery dismissed concerns, pointing out that pricing of its benchmark bond had tightened.

"That tells me, as chief executive of the business, that the bond market can be quite volatile and reactive to headline news," he said.

Irish Independent

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