Avation plc (LON:AVAP) is the topic of conversation when Canaccord Genuity’s Damian Brewer, Transport Research Analyst, caught up with DirectorsTalk to discuss their interim results for the six months ended 31 December 2023.
Q1. What stood out in Avation’s latest results?
Cash flow generation and reduction in net debt.Net debt reduced to $699.4m from FY23$731.2m (H1-23 $746.9m).
Q2. How will the state of the Airline industry impact Avation?
Positively – there are aircraft availability shortages. Directly, that means airlines are anxious to retain/keep fleet. It also likely means higher ticket prices on airlines and a great ability for airlines to pay higher lease fees for aircraft
Q3. Why does Avation plc represent a good investment?
Its shares are less than half asset value – in other words, if it was taken-over and broken up tomorrow, it’s possible a buyer might double their money. Absent a break-up, likely higher lease rates (in time – from 2026-27 for Avation) and lower cost of debt (as the 2026 bond is refinanced) open the ‘jaws’ to higher revenue and lower costs and thus better profits that the shares fail to price-in, we think.
Avation plc (LON:AVAP) is a commercial passenger aircraft leasing company owning a fleet of aircraft which it leases to airlines across the world. Avation’s future focus are new technology low CO2 emission aircraft. Its current customers include easyJet, Eva Air, Philippine Airlines, Alliance Air India, Vietjet Air, Fiji Airways, Mandarin Airlines, Cebu Pacific, airBaltic and Danish Air Transport.
