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Highlights

  • AVAP reported a Moody’s first-time rating of B1 with stable outlook in July FY25
  • AVAP completed multiple aircraft sales, unlocking over GBP 53 million in combined net proceeds
  • AVAP repurchased GBP 21.6 million in FY26 Notes and 8.36 million ordinary shares since June FY24

Avation PLC (LSE: AVAP), a commercial passenger aircraft leasing firm headquartered in Singapore, issued a trading update on 4 July 2025 outlining developments across its operations, fleet management, financial strategy, and orderbook progress. The company leases a mix of narrowbody jets, turboprops, and widebody aircraft to airline clients across 14 countries, with a portfolio of 33 aircraft currently on lease.

On 2 July 2025, Moody’s Ratings assigned Avation a first-time Corporate Family Rating of B1 and an issuer rating of B2, both with a stable outlook. This follows a period of industry-wide recovery supported by air travel growth and constrained new aircraft supply. According to IATA, global passenger air traffic rose 8.0% year-on-year through April FY25, with international travel up 10.8%. In the Asia-Pacific region where most of Avation’s clients operate growth in revenue passenger kilometres reached 10.6% despite a decline in the U.S. market.

Supply chain delays in aircraft manufacturing continue to limit new deliveries, contributing to record global order backlogs near 17,000 aircraft. These constraints have supported lease rates and aircraft valuations across both new and used markets, positively impacting lessors like Avation.

Avation’s current fleet includes 14 narrowbody jets, 17 ATR 72-600 turboprops, and 2 widebody aircraft. Narrowbody planes now account for 55% of the fleet by book value. The average fleet age stands at 8.4 years, with an average remaining lease term of 3.9 years. All aircraft in the portfolio are presently under lease.

During the financial year, the company sold four ATR 72-600 aircraft two to lessees exercising purchase options and two new deliveries resulting in combined net proceeds of approximately GBP 20.3 million. Avation also acquired an 11-year-old Airbus A320-200 on lease to Etihad Airlines and expects to sell a Boeing 777-300ER currently leased to Philippine Airlines. The latter transaction is projected to generate GBP 33 million in net cash proceeds above book value, intended for debt repayment or reinvestment into narrowbody aircraft.

Additional updates include a delayed lease start for an ATR 72-600 with Colombian airline Clic Air due to maintenance by the prior lessee. Meanwhile, another ATR will transfer to PNG Air under a six-year lease following its redelivery from Mandarin Airlines in Q4FY25. Three more ATR leases are set to expire during FY26, with replacement leases under consideration.

Avation maintains firm orders for 10 ATR 72-600s scheduled for delivery between Q4FY25 and Q2FY28. The first two units are already placed with airlines in Japan and South Korea. The company also holds purchase rights for an additional 24 ATR aircraft through June 2034, which it considers valuable given global supply constraints.

The company reported ongoing deleveraging activity, including the repayment of US$25 million in secured loans and the repurchase of GBP 21.6 million in face value of its Senior PIK Toggle Notes due 2026. The outstanding Notes balance now stands at GBP 310 million, with Avation actively exploring refinancing options ahead of the 31 October 2026 maturity.

As of early July 2025, Avation’s unaudited cash balance totals GBP 125 million. The company is preparing an update to its Global Medium-Term Note (GMTN) programme to support future financing efforts.

Rent arrears and receivables (excluding maintenance reserves) have decreased by around GBP 9.5 million since June 2024. Rent collection for the 11 months ended 31 May 2025 averaged 103%, reflecting continued recovery in payment performance.

Avation also reported share buybacks totaling 8.36 million shares since June FY24, with prices ranging from 138p to 150p per share. Following cancellations, total shares in issue stand at 66.59 million.

Executive Chairman Jeff Chatfield commented on the company’s post-pandemic recovery, reaffirming Avation’s orderbook strength and strategic interest in further narrowbody acquisitions. He noted that performance for July 2025 remains in line with internal expectations.

Shares in AVAP were trading at 2.12% higher at GBX 159.82 on 4 July 2025 following the update.