Tuesday 19 November 2019

Jet leasing firm Avolon buoyed by $179m profit

Domhnal Slattery. Photo: Bloomberg
Domhnal Slattery. Photo: Bloomberg
John Mulligan

John Mulligan

The chief executive of Dublin-headquartered aircraft leasing firm Avolon, Dómhnal Slattery, said he'll let the company's results speak for themselves as its shares continue to trade below the $20 at which they made their debut in New York in December.

"We'll let the numbers speak for themselves… and the market will judge us appropriately over time," he told the Irish Independent as Avolon unveiled fourth quarter and full-year results in New York.

It's the first time it issued results as a public company.

Avolon said its adjusted net income rose 43pc to $179m (€160m) in 2014, while revenue jumped 35pc to $606m (€541m).

Citi said Avolon's fourth-quarter performance was also better than expected.

"We've had very strong momentum across all aspects of our business," said Mr Slattery.

Avolon, which was co-founded by Mr Slattery and Avolon's president and chief commercial officer John Higgins, has a market capitalisation of $1.6bn (€1.42bn).

Mr Higgins said that demand for new aircraft remains strong in Asia, while more mature regions such as North America are seeing a "big wave" of airline fleet renewal programmes.

At the end of 2014, Avolon had 126 owned aircraft, 11 managed aircraft and 98 aircraft on order.

The company has about 50 airline clients in 28 countries. Its customers include Etihad, Jet Airways, LAN, China Airlines and American Airlines.

"We're seeing a very strong pipeline of deal flow globally," said Mr Higgins.

"Asia continues to present a lot of opportunity, as you would expect."

He said that in Europe there's "less robust growth", but that the company remains active as airlines replace fleets and fly younger, more efficient aircraft.

The accounts for Avolon also show that executives at the leasing group were paid a total of $8.8m (€7.8m) last year. It did not break down individual executive compensation.

They also reveal that Mr Slattery received a discretionary bonus of $2.6m (€2.3m) during 2014, and that he repaid all $10.3m in loans advanced to him by the company.

Mr Slattery owns 1.1m shares in Avolon, currently valued at $22m (€19.6m).

Mr Higgins also said the price of oil is a net neutral impact for Avolon.

As oil prices fall, airlines make more money and expand. Higher oil prices can also encourage airlines to evolve towards newer, more fuel efficient aircraft.

Mr Slattery said airlines are planning 10 or 15 years ahead and are still basing their expansion strategies on oil selling at $100 a barrel.

"Oil futures today are telling you that oil will be $80 a barrel in 2018," he said.

Avolon has been backed to the tune of $7.2bn (€6.4bn) by private equity giants and banks, including Oak Hill Capital Parters, Cinven and CVC.

Irish Independent

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