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  • Writer's pictureMark Watson-Mitchell

Avation – it has been a bumpy flight but now with a better horizon in view

Avation (LON:AVAP) together with its subsidiaries, leases commercial passenger aircraft to airlines worldwide.


Ahead of announcing its interim results next Friday, 3rd March, the group has given the market guidance by way of an Update pointing to a full year outturn that will be ahead of expectations.


The Singapore headquartered company's fleet includes narrow-body jets, twin-aisle jets, and ATR 72 twin-engine turboprop aircraft.


Set up in 2006, the company now owns and manages a fleet of 36 commercial passenger aircraft. It is also involved in the financing business.


The Pre-Results Trading Update


Chairman Jeff Chatfield has today stated that due to a combination of factors, such as lower than anticipated aircraft transition costs, lower administration and legal costs, improvements in finance income, recognition of gain on an investment in a listed airline and other variances, Avation expects its financial performance for the full year ending 30 June 2023 to be significantly ahead of market expectations.


Analyst Opinion – ‘fair value’ of 185p a share


John Cummins at WH Ireland was encouraged by the Update statement, especially after the last couple of challenging years for the group.


He notes that market dynamics are starting to provide and increasingly positive backdrop for aircraft lessors such as Avation.


Ahead of this announcement Cummins was anticipating that the year to end June 2023 would see revenues of $93.0m and an adjusted pre-tax loss of $3.4m.


For the coming year his estimates were for $100.9m revenues and an adjusted pre-tax profit of $1.7m.


Conclusion – facing bluer skies


The group’s shares have endured a very bumpy flight over the last few years, they reached 330p in January 2020. The Covid Pandemic saw them drop to 130p within the following two months.


Since then, they have been down to 66p, in May last year, before starting to climb again to rest around the 115p level.


But after the Update the shares have risen 10p to 125p and look to be facing bluer skies.

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