I don't think the $85m will be deployed for new planes, my impression was they have borrowed more secured debt to buy back the unsecured hence improving cash flow but either way this was a big plus that the market has missed primarily due to a strange seller who just bought shares off them for 150p on 28 November and selling down 3 months later for a loss.
Also a 5% generic increase cannot be applied to the fleet but there is very useful information in their investor presentation which they released on their website end of January. They are implying that the value of a 10 year old B777-300ER has gone up by 40%. Bear in mind AVAP's B777 is only 7 years old and they have just secured a lease extension that would generate c$12m p.a. for the next 5 years on that. The value of the A330 has gone up by 20% plus and the market value of a new ATR 72-600 is $23m ( their options are around the $18m mark). I get to a c$50m increase in fleet value applying these uplifts mentioned in the presentation but obviously this is just an assumption as each aircraft will have to be valued individually.
Regardless I see NAV around 350p whenever AVAP applies these uplifts.
The key phrase in the RNS is "initially support the refinancing of select aircraft in Avation's fleet, with the flexibility to finance additional aircraft". So you're right it's not dedicated just for new planes but to generate $400k of cash flow it would need to be additional aircraft.
I say that because $4.8m per annum of improved cash flow equates to reducing interest by the equivalent of a 5.6% rate reduction per annum.... and no one is THAT generous! Less any slower amortisation of course.
Interesting to note the other stats you share; are you referring to the AGM video of 19th December 2024?
I think they were already paying c5% or less on their secured debt. The unsecured bonds are 8.25%.The interims next week should provide more info on what they intend to do. But even if they were going to buy planes it could only be in the secondary market (if the opportunity exists). Any new orders take years to complete so will be interesting to see.
The January presentation is a slide deck on their website. I will post the link here.
AN, thank you, note 35 shows secured borrowings are a weighted 4.8% but that rate is achieved through swaps. I do very much appreciate the point (and opportunity) that "new" planes wouldn't be new planes (in age) and therefore bought in the secondary market. Judging by the supply and demand it's nearly indisputable that an opportunity exists..... the question is the availability in the secondary market, and at what price.
Good article.
A very sleepy market - I bought some more last week as it hit 140p.
I don't think the $85m will be deployed for new planes, my impression was they have borrowed more secured debt to buy back the unsecured hence improving cash flow but either way this was a big plus that the market has missed primarily due to a strange seller who just bought shares off them for 150p on 28 November and selling down 3 months later for a loss.
Also a 5% generic increase cannot be applied to the fleet but there is very useful information in their investor presentation which they released on their website end of January. They are implying that the value of a 10 year old B777-300ER has gone up by 40%. Bear in mind AVAP's B777 is only 7 years old and they have just secured a lease extension that would generate c$12m p.a. for the next 5 years on that. The value of the A330 has gone up by 20% plus and the market value of a new ATR 72-600 is $23m ( their options are around the $18m mark). I get to a c$50m increase in fleet value applying these uplifts mentioned in the presentation but obviously this is just an assumption as each aircraft will have to be valued individually.
Regardless I see NAV around 350p whenever AVAP applies these uplifts.
AN,
The key phrase in the RNS is "initially support the refinancing of select aircraft in Avation's fleet, with the flexibility to finance additional aircraft". So you're right it's not dedicated just for new planes but to generate $400k of cash flow it would need to be additional aircraft.
I say that because $4.8m per annum of improved cash flow equates to reducing interest by the equivalent of a 5.6% rate reduction per annum.... and no one is THAT generous! Less any slower amortisation of course.
Interesting to note the other stats you share; are you referring to the AGM video of 19th December 2024?
OB
I think they were already paying c5% or less on their secured debt. The unsecured bonds are 8.25%.The interims next week should provide more info on what they intend to do. But even if they were going to buy planes it could only be in the secondary market (if the opportunity exists). Any new orders take years to complete so will be interesting to see.
The January presentation is a slide deck on their website. I will post the link here.
https://www.avation.net/files/avap_corporate_pres_Jan2025.pdf
AN, thank you, note 35 shows secured borrowings are a weighted 4.8% but that rate is achieved through swaps. I do very much appreciate the point (and opportunity) that "new" planes wouldn't be new planes (in age) and therefore bought in the secondary market. Judging by the supply and demand it's nearly indisputable that an opportunity exists..... the question is the availability in the secondary market, and at what price.
OB
Seems to be waking up. A 3.6% rise today.