Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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CORRECTION: This post should be titled "Webinar"
We are hosting a ShareSoc Webinar with Avation plc (AVAP), 7 July 2020 which may be of interest. Registration and more can be found here: https://www.sharesoc.org/events/sharesoc-webinar-with-avation-plc-avap-7-july-2020/
Virgin Australia accounted for around 6% of future earnings, airBaltic and VietJet account for 20%+ of future earnings each. Recent rating downgrades were as a result of the Virgin Australia administration. Virgin are still running flights and should be bought as a whole or in parts, some aircrafts should be bought by the adminstrator. Avation has filed $97m claim against the company. I see a correction in the share price in the coming weeks and months, the drop and rating downgrades were an overreaction IMO.
Very positive outlook. Limited exposure to Virgin Australia, main customers like airBaltic are financially strong. Signed deferral agreements with 15 of 19 airline customers, they will pay with interest. High cash balance and long leases on aircrafts. The admin costs are due to be reduced from $11m last year to around $8.5m this year. No plans to purchase any new aircrafts, existing orders have been cancelled. Diverse customer base, 19 airline customers in 16 countries. This will jump pretty quickly as the covid-19 pandemic eases and air traffic increases, some domestic air traffic has increased due to social distancing measures.
https://www.flightglobal.com/virgin-australia-targets-end-june-sale-administrator/138199.article
Virgin Australia targets end-June sale: administrator
By Cirium4 May 2020
Twenty parties are interested in recapitalising Virgin Australia, administrator Deloitte said after the first creditors meeting held virtually on 30 April, and the airline aims to receive binding offers in June.
“A large number of parties have expressed an interest, eight have signed non-disclosure agreements and negotiations are continuing with a further 12,” the carrier said in a 30 April statement.
It adds that Deloitte has “moved quickly in its plan to restructure and refinance the business and seek interested parties for a sale” since its appointment on 20 April.
Investment banks Morgan Stanley and Houlihan Lokey have been appointed to run the sale process.
Deloitte intends to seek an extension of the convening period of three months, “based on the scale and scope of their work to position the business for a successful sale”. The carrier says this means the second creditors’ meeting will be held around 22 August, adding that it is “not unusual in a complex voluntary administration such as this”.
Deloitte lead administrator Vaughan Strawbridge said in the same statement: “We are now moving quickly to finalise a business plan to help guide interested parties and, in terms of next steps, mid-May is currently the timeframe for the receipt of indicative offers. Binding offers will then be required in June. We remain confident that our target of achieving a sale by the end of June is achievable.”
He added: “Management had already put in place a transformation plan to enhance profitability. Voluntary administration provides a process where that can be accelerated in a way that it couldn’t before.”
Following the update, S&P downgraded Virgin Australia’s unsecured debt from “C” to “D”, citing the moratorium placed on all the airline’s creditor payments. It expects no such payment to be made between the first creditor meeting and the second one targeted for 22 August.
“During the administration process, the company will explore options to recapitalise the business, or otherwise, realise value from the company’s asset base to maximise returns to creditors,” S&P states.
“We expect that unsecured lenders will be forced to accept less value for amounts owing under the terms of the existing unsecured debt facilities as part of the anticipated debt restructuring and recpaitalisation process.”
In its statement, Virgin Australia says it remains in operation while in voluntary administration, with 64 return domestic services each week, contracted domestic charter flights and federal government-supported international flights to Hong Kong and Los Angeles.
RNS of Virgin in voluntary administration today says 11 ATR 72's (with 2 sub leased) & 2 Fokker F100's,
so a sizeable number for a potentially detrimental effect.
Although this step is a defensive mechanism and means it can be sold to somebody else etc.
it does also mean that it's also designed to stop money leaving the company.
Personally I think ST was a bit optimistic about being so positive as a recovery play yet.
Airlines and their servicers are in sizeable trouble as their industry has virtually stopped, and the state of them like pubs and holiday companies mean that financial support, rights issues etc have all got to be taken into the mix - basically they will emerge reliant on others to bail them out.
Avation is in a good financial position but I wouldn't expect business as usual or a takeover at a normal price in the short or medium term, even when the lockdown ends.
Thanks for that. If it is five, then that should be manageable.
Given the update came when the shares were at all-time lows, it will be interesting to see if management topped up their holdings ...
Thanks - was getting worried or excited!
Believe it is 5 ATR72-600s
Closing bid is 130. Errors showing on other LSE boards as well.
Is anyone else showing the price being in the 300s? Dispaly error or what am I missing?
I am becoming concerned that as yet we have heard nothing from AVAP regarding the remaining 3 ATRs' which flybe had leased from us, one of which which they had out on a wet lease to SAS. I think we are due some comment on this.
Avation was built out of leasing aircraft to Virgin Australia. Over the years, AVAP has done well to diversify customer and geographic risk. On the back of the C-virus, Virgin Australia is wobbling badly, and has gone to the government for a bailout. It seems accessing results presentations on the company’s website is no longer possible. Does anyone remember what portion of its assets are tied up with Virgin?
Hi Oldone, Logan air has already committed to 16 ex Flybe routes albeit with less flights. They've got 2 planes from Avac but will need more - I wonder where they'll get the extra aircraft from?
Just the two ATRs referenced in the RNS today I think - those leases remain in place to Loganair so not sure why the price drop today?
Now remind me, brains trust, how many AVAP aircraft are leased to Flybe? Five ATR’s, or is it more?
Avation present at our London seminar on the 11th March. More details here: https://www.sharesoc.org/events/sharesoc-growth-company-seminar-in-london-11-march-2020/
Carcosa61
In view of the fact the posting you have chosen to respond too is over 4 years old it would seem i you who are drawing attention to Oceanwood's current holding in Avation of 24.27% (using your figures) which had been reduced by 3% since September. Any reason for that as it seems a little strange to accuse dhlindy of spreading false rumours with a 4 year old post!
Wrong. Oceanwood have been invested for a long time starting as far back as 2011.
They have in fact been recent net sellers, selling 3% of their holding since last September.
Oceanwood have never held 28% of the shares in their history. So either your data source is wrong or you are just trying to spread false rumours.
Oceanwoods latest declared position is 15,224,539 shares, representing 24.27% of the shares in issue.
Sorry TT I meant British listed not based you are correct it is based in Singapore This is a star for me too now my biggest holding. It is still a buy even is if the takeover fails . Both Thomas Cook planes are now placed with another airline so just a few months lease payments lost will make a small dint to profits.
I'm with you Bear although there could hopefully be a hefty premium. I have 9 other holdings all on the AIM so this was my star holding! I'm unsure about British based though as the company is in Singapore and the BoD and senior management are largely Aussies.
The PEG last year was 0.30.
The company keeps making money as well.
This looks like a buy to me, even without the bid situation.
Thankfully I took the opportunity to top up my holding during the recent fall into the 260's
But personally I hope that Avation remains as is, here is why?
I have been in from almost the start it has kept growing steadily, trebling my investment.
It has kept increasing it's dividend so that now it is a reasonable 3% covered 4 times
That means it is growing it's asset base by 9%
Even with the recent price hike its NAV is now roughly equal to the share price.
It reports and hold its assets and pays it dividend in $
Allowing me to hold a British based company but I can diversify from all my sterling holdings.
It sells into a global market, has a good credit rating.
It has forward orders placed for planes that are in high demand and easy to place.
Bear
Following this announcement, the company is now considered to be in an 'offer period' as defined in the code, and the dealing disclosure requirements ... will apply," the board said in its statement.
"The company confirms that, at the time of this announcement, it is in preliminary discussions with one interested party about a potential sale of the company."
Is this new territory for Avation?