Avation, a London-listed commercial-aircraft leasing company, has announced a drop in pretax profit for the first half of the year. The company attributes this decline to a decrease in lease rental revenue and a reduction in arrears payments from an airline.
Financial Performance
Avation’s pretax profit for the first half of the year amounted to $13 million, compared to $22.5 million in the previous year. Additionally, revenue fell from $112.2 million to $91.9 million, with lease rental revenue declining from $93.4 million to $85.9 million.
The decrease in lease rental revenue can primarily be attributed to a reduction in the number of aircraft leased on finance leases, which decreased from six to five between June 2022 and June 2023.
Growth Strategy and Future Plans
Despite the decline in profit, Avation remains optimistic about its future prospects. The company plans to regrow its business in a prudent and sensible manner, focusing on organic growth. As part of this strategy, Avation will be adding two ATR aircraft to its leasing portfolio, scheduled for delivery in 2024.
Furthermore, Avation holds 29 purchase rights on new ATR 72 aircraft, which are expected to receive approval for use with sustainable aviation fuel by 2025. This aligns with the company’s commitment to sustainability and its efforts to contribute to a greener aviation industry.
Positive Developments
Avation has also experienced positive developments amidst the challenging financial environment. The company was able to reverse approximately $3.3 million in previously recognized impairment charges. Additionally, there has been a positive impact on the valuation of Avation’s ATR aircraft purchase rights.
Furthermore, Avation has taken proactive steps to reduce overheads by managing expenses effectively. This includes reducing headcount and actively managing legal expenses and other expenditure.
In conclusion, while Avation’s first-half pretax profit has declined, the company remains focused on its growth strategy and is confident in its ability to navigate the current market challenges. With a commitment to organic growth and sustainability, Avation aims to continue serving the aviation industry and enhancing its leasing portfolio.
