Avolon Reports 13% Increase in Lease Revenue, 20% Increase in Liquidity in 2020

Avolon, an international aircraft leasing company, reported financial and operational results from 2020, including a 13% increase in lease revenue vs. 2019 and a 20% increase in total available liquidity.

2020 Financial Highlights

Lease Revenue 2,279 2,620 (13%)
(Loss)/Profit (37) 725  
Total Available Liquidity 6,867 5,746 20%
Total Assets 30,838 29,303 5%
Secured Debt/Total Assets 25% 27% (2%)
Net Debt to Equity 2.3x 2.2x 0.1x
  • Avolon reported total available liquidity of $6.9 billion at year-end and net debt to equity of 2.3x.
  • The company raised $4.4 billion of debt during 2020 at an average cost of 3.7%.
  • Post financial year-end, in January 2021, Avolon issued $1.5 billion of senior unsecured notes at its lowest ever public coupon.
  • The company reduced capital and debt principal commitments in the 2020 to 2024 timeframe by more than $9.5 billion.
  • Avolon reduced near-term debt maturities by $1.4 billion through a tender offer for $723 million of notes maturing in 2022 and 2023, as well as the buyback of $651 million of senior unsecured notes maturing between 2021 and 2026, at a discount to par.
  • Avolon ended 2020 with $4.7 billion of revolving debt capacity, with maturities from 2024 onward and an undrawn balance of $4.2 billion.
  • In addition, Avolon closed the sale of 19 aircraft to the Sapphire 2020-1 vehicle. The aircraft were acquired from the Avolon fleet following the issuance of $620 million of senior secured notes and a majority equity investment from a third-party investor.
  • Lastly, Avolon declared a dividend of $193 million in Q1/20, $65 million of which was withheld in accordance with the holdback provisions in Avolon’s shareholder agreement, bringing the total withheld amount to $167 million.

2020 Operating Highlights

  • Avolon had an owned and managed fleet of 572 aircraft at year end, with total orders and commitments for 270 aircraft.
  • Avolon’s average owned fleet age was 5.3 years, with an average remaining lease term of 6.8 years.
  • The company reported fleet utilization for the year of 98%.
  • During 2020, Avolon entered into sale and leaseback commitments for 44 aircraft for a total of $2.3 billion.
  • Avolon had a total of 142 airline customers operating in 61 countries, delivered a total of 57 new aircraft and transitioned 10 aircraft to a total of 26 customers.
  • The company further reduced its aircraft purchase commitments in the 2020 to 2023 timeframe by a net 100 aircraft through a combination of cancellations and deferrals.
  • Avolon also sold 29 aircraft in 2020, three of which were managed, and executed sale agreements in respect of 28 aircraft and a total of 141 lease transactions comprising new aircraft leases, follow-on leases and lease extensions.

“2020 was an extremely challenging year for the aviation industry globally. As the pandemic developed, governments were forced into imposing travel bans, resulting in grounded fleets with a severe and immediate impact on the world’s airlines. We worked closely with our customers to provide support while also prudently managing our own capital position. We proactively re-aligned our capital commitments and addressed near-term debt maturities to position our business for what we anticipated to be a gradual recovery,” Dómhnal Slattery, CEO of Avolon, said. “While many markets remain in lockdown in early 2021, the roll-out of vaccines is progressing. We expect 2021 to be 2020 in reverse and to see a pick-up in travel in the second half of the year. Our actions to strengthen our balance sheet during 2020 saw us end the year with the strongest liquidity position in our history, ensuring we are well placed as the industry transitions into the recovery phase.”

Avolon also made changes to its board, including appointing Chris Jin to chair, while Rachel Bai and Yi Shen were appointed to the board as Bohai nominees, effective Feb. 10. In addition, Adam Tan, who had served as Avolon’s chairman since 2016, and Daniel Chen, a non-executive director, stepped down from the board to concentrate on the re-organization of the HNA Group.

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