Avolon reports Q1 2022 net loss of $182m

By Rebecca Jeffrey

Image: Shutterstock

International aircraft leasing company Avolon has reported an impairment of $304m and a net loss of $182m for the first quarter of 2022 as a result of the Ukraine-Russia war.

As of March 31, Avolon had 10 owned aircraft located in Russia representing less than 1% of Avolon’s portfolio value net of security deposits and maintenance reserves.

The impairment of $304m is in respect of the company’s exposure to Russia, reducing the carrying value of the 10 owned aircraft to zero.

The Dublin, Ireland-based company delivered $658m of lease revenue and generated $320m of net cash from operating activities in the first quarter of 2022.

It saw adjusted net income of $80m, excluding the impact of Russia.

The impairment of $304m is partly offset by the net release of $43m in other lease associated balances resulting in a $261m net impact to the income statement.

Avolon ended the quarter with total available liquidity of $5.4bn, including $477m of unrestricted cash and $4.9bn of undrawn debt facilities.

Last year, Avolon became the launch customer for Israel Aerospace Industries’ (IAI) A330-300 freighter conversion programme after signing a deal for 30 of the aircraft.

The company owned and managed fleet of 592 aircraft at quarter end, with total orders and commitments for 240 fuel-efficient, new technology aircraft.

Avolon also delivered a total of six new aircraft to four customers and transitioned 11 aircraft to follow-on lessees; executed commitments for the sale and leaseback of 16 aircraft; sold three owned aircraft and entered into letters of intent for the sale of a further 35 owned aircraft; and ended the first quarter with a total of 142 airline customers operating in 61 countries.

Dómhnal Slattery, Avolon chief executive, commented: “Given the impact of sanctions, we are recognising an impairment charge of $304m in the first quarter in relation to our aircraft which were previously on lease in Russia. While we continue to make every effort to recover these assets and are pleased to have repossessed four aircraft, we are recognizing the full impairment this quarter, putting the financial impact of Russian sanctions firmly behind us.

Despite the headwinds of Covid-19 and Russian sanctions, we delivered our strongest quarterly underlying performance since the onset of the pandemic. Our improved year-on-year performance was largely driven by the rapid reopening of borders in Asia and increased flying globally, which supported a further improvement in the financial health of our customers and resulted in increased cash collection rates.”

Lessor Avolon targets cargo with A330 conversion deal

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