Revenue up, profits down at expanding Irish aircraft leaser Avolon
Revenues are up and profits are down at Avolon as the Dublin-based aircraft leasing company invests heavily in new engines for its expanding fleet.
Turnover at Avolon - the world’s third-largest aircraft lessor - rose 7pc to $678m (€609m) for the second quarter ending in June. Profits declined by 26pc to $185m (€166m), hit by $83m in finance costs related to debt facility and refinancing activities.
Avolon chief executive Domhnal Slattery said the quarter was particularly significant because of the company’s achievement in April of an investment-grade credit rating that allowed Avolon to sell $2.5bn in bonds maturing from 2022 to 2026 at competitive yields.
Mr Slattery said the fundraising “was delivered well ahead of the expected timeframe and affirms our longheld view that we have an investment-grade quality business.”
The company followed up that cash injection in June by signing a deal for 140 new engines at the Paris Air Show from CFM, a joint US-French venture between GE Aviation and Safran Aircraft Engines. The 140 CFM Leap-1A engines carry a list value of $2bn and will go into Avolon’s growing fleet of Airbus A320neo aircraft.
Mr Slattery said Avolon’s sale of 38 aircraft and delivery of 15 aircraft to 10 customers during the quarter helped the company to increase its liquidity by 12pc to nearly $6.4bn. That figure includes unrestricted cash, undrawn credit facilities and undrawn debt.
At the end of June, Avolon said it had a fleet of 923 owned, managed and on-order jets.
Avolon is 70pc owned by Bohai Leasing Co, a subsidiary of Chinese conglomerate HNA, and 30pc by Orix Aviation Systems, the Dublin-based leasing unit of Japanese investment group Orix.