DUBLIN-BASED aircraft lessor Avolon has cancelled more commitments to buy Boeing's troubled 737 Max but said it continues to have strong liquidity, with $5.5bn (€4.87bn) available to support the company as airlines struggle to return to profitable flight schedules.
It said it has cancelled orders for an additional 27 Boeing 737 Max aircraft.
The company has also reduced its near-term debt commitments by buying back $639m of its unsecured bonds at a discount to their par value.
The lessor - one of the world's biggest - said that as of the end of June, many of its customers had entered short-term rental deferral arrangements or were in arrears on their rental obligations.
Its lease revenue collection rate during the first half of the year was 68pc, with two-thirds of the collection shortfall related to deferral arrangements.
Avolon chief executive Domhnal Slattery said the second quarter of the year was a "challenging period" for the aviation industry as it was battered by the Covid pandemic. He said the pace and timing of recovery remains uncertain.
"The months ahead will be difficult, but we have the experience and balance sheet to manage through these headwinds," he insisted.
Avolon's owners include Orix and Bohai Leasing. Bohai is majority-owned by China's HNA conglomerate.
"Decisive measures to strengthen our capital position included the opportunistic buy back of $639m of our unsecured bonds at a discount to par, in so doing reducing our near-term debt maturities," said Mr Slattery.
"More significantly, we have reduced our near-term commitments by over 140 aircraft since the start of the year."
Avolon has cancelled commitments to buy the 27 737s between 2020 and 2022, and in the first quarter cancelled an order for 75 Max jets. It has also cancelled or deferred orders for four Airbus jets.
At the end of June, Avolon owned and managed 547 aircraft and had total orders and commitments to buy 277.
It noted that during the second quarter, 12 of its customers were due to start repayments at the scheduled expiry of their deferral arrangements.
Seven of those customers made payments in full. Five had fallen into arrears or sought an extension to their short-term rental deferral arrangement for some or all of their rental obligations.
Avolon executed 16 lease transactions in the second quarter, comprising new aircraft leases, follow-on leases and lease extensions.
Meanwhile, rival aircraft lessor Aercap, which is also based in Dublin and is the world's largest in the sector, said yesterday that it raised $3bn of funding during the second quarter of this year. That included $2.5bn of unsecured bonds, it said.
During the quarter the lessor, whose chief executive is Gus Kelly, said it had bought two new aircraft and sold nine. It also signed lease agreements for 10 aircraft, including one wide-body jet and nine narrow bodies.
The International Air Transport Association (IATA) predicted last month that the world's airlines will lose $84.3bn (€74.6bn) in 2020. It expects total airline revenues to slump 50pc to $419bn (€371bn).
By next year, IATA expects losses to have narrowed to $15.8bn as revenue rises to $598bn.
IATA reckons there will be 2.2 billion airline passengers this year - the same number as in 2006.