03 May 2022
2022 FIRST QUARTER RESULTS
Avolon reports increased revenue and cash collections as borders reopen
Dublin | 3 May, 2022: Avolon, the international aircraft leasing company, announces results for the first quarter (Q1) of 2022.
2021 THIRD QUARTER | FINANCIAL HIGHLIGHTS
|INCOME STATEMENT ($ million)||Q1 2022||Q1 2021||CHANGE|
|Adjusted Net Income/(Loss) (excluding Russia)||80||(83)||(163)|
|BALANCE SHEET ($ million)||Q1 2022||FY 2021||CHANGE|
|Total Available Liquidity||5,372||6,258||(884)|
|Secured Debt / Total Assets||20%||20%||-|
|Net Debt to Equity||2.4x||2.4x||-|
- Delivered $658 million of lease revenue and generated $320 million of net cash from operating activities in the quarter;
- Adjusted Net Income of $80 million excluding the impact of Russia;
- Ended the quarter with total available liquidity of $5.4 billion, including $477 million of unrestricted cash and $4.9 billion of undrawn debt facilities;
- Raised $300 million of drawn and revolving unsecured debt facilities, bringing total revolving debt capacity to $5.9bn at quarter end;
- Declared and paid a dividend of $12.5 million in respect of FY21 and released $104.7 million of previously withheld dividends to Bohai; and
- Ended the year with a secured debt to total assets ratio of 20%, over $17 billion of unencumbered assets and net leverage of 2.4x.
2022 FIRST QUARTER | FLEET HIGHLIGHTS
- Owned and managed fleet of 592 aircraft at quarter end, with total orders and commitments for 240 fuel-efficient, new technology aircraft;
- Average owned fleet age of 6.0 years with an average remaining lease term of 6.9 years;
- Delivered a total of 6 new aircraft to 4 customers and transitioned 11 aircraft to follow-on lessees;
- Executed commitments for the sale and leaseback of 16 aircraft;
- Sold 3 owned aircraft and entered into letters of intent for the sale of a further 35 owned aircraft; and
- Ended the first quarter with a total of 142 airline customers operating in 61 countries.
2022 FIRST QUARTER | IMPACT OF RUSSIA
- As disclosed in Q1 update, as of 31 March, Avolon had 10 owned aircraft located in Russia representing less than 1% of Avolon’s portfolio value net of security deposits and maintenance reserves;
- During the quarter, Avolon recognized an impairment of $304 million in respect of our exposure to Russia, reducing the carrying value of the 10 owned aircraft to zero. This impairment is partly offset by the net release of $43 million in other lease associated balances resulting in a $261 million net impact to the income statement; and
- As a result of this impairment, Avolon is reporting a net loss of $182 million for the quarter, and an adjusted net income, excluding the impact of Russia of $80 million for the period.
Dómhnal Slattery, Avolon CEO, commented: “As we reflect on our performance during the quarter, first and foremost our minds are with the people of Ukraine and those – both at home and abroad – that are impacted at this time. We are hopeful for a swift and peaceful end to the conflict.
Given the impact of sanctions, we are recognising an impairment charge of $304 million in the first quarter in relation to our aircraft which were previously on lease in Russia. While we continue to make every effort to recover these assets and are pleased to have repossessed four aircraft, we are recognizing the full impairment this quarter, putting the financial impact of Russian sanctions firmly behind us.
Despite the headwinds of COVID-19 and Russian sanctions, we delivered our strongest quarterly underlying performance since the onset of the pandemic. Our improved year-on-year performance was largely driven by the rapid reopening of borders in Asia and increased flying globally, which supported a further improvement in the financial health of our customers and resulted in increased cash collection rates. This performance re-affirms the inherent strengths of our business and the absolute resilience of the aircraft leasing model, providing us with confidence in the outlook for the remainder of the year.”