Avation gets takeover approach but ends talks, says well-positioned

(Alliance News) - Avation PLC on Thursday revealed it was approached this summer about a potential takeover offer, but it has since ended the conversation, noting that it is well-placed in the current business environment as a public equity-backed aircraft lessor.

Avation shares were up 4.8% to 130.00 pence in London on Thursday afternoon. The stock is up 13% over the past 12 months.

Avation held its annual general meeting in Singapore on Thursday, telling shareholders that market values for aircraft have continued to recover from the hit of Covid-19 travel restrictions. The values of new narrowbody aircraft types are up 10% to 15% since January 2022, it said.

At the same time, Avation said it has made progress on collection of rent and maintenance arrears. These are down by USD6.3 million since the company's June 30 year-end. It expects to receive a final distribution from the administrator of Virgin Australia of about AUD1.0 million, around USD655,394, in December. The company has USD140.7 million cash, up USD23.8 million since the end of June.

Avation's fleet currently totals 35 aircraft leased to 15 airlines in 13 countries, with an average remaining lease term of 4.9 years. It said it has no exposure in its A320 and A320 fleet to the recent engine recall for some of these Airbus SE jets.

Avation said its broker was approached over the summer about a potential takeover offer. However, the broker was "unable to verify the funding package of the potential bidder" so broke off talks.

Looking ahead, Executive Chair Jeff Chatfield said Avation, as a stock-exchange listed lessor, is in a sweet spot in the current business environment of rising interest rates. "Pure private equity backed or primarily debt backed lessors will find this current commercial environment challenging, their investors return requirements may outstrip airlines' ability to pay lease rents," he argued.

Chatfield said Avation's "environmentally friendly orderbook" also positions it well to for the transition to low CO2 aircraft.

By Tom Waite, Alliance News editor

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