avation plc investor presentation - … · • airbus a320 transitioned from air berlin to easyjet...

June 2018

LSE: AVAP

Avation PLC Investor Presentation

About Us

Attractive Fleet Profile

Diversified Customer Base

Good Access to Liquidity

Full Leasing Platform

• Experienced management team, led by Executive Chairman Jeff Chatfield

• Leasing platform with operational capability in OEM orders, aircraft acquisition & disposal, lease origination & extension, transition, repossession and part out

2

Company OverviewPublicly Listed Aircraft Leasing Business with Long Track Record

Notes

1. Excluding finance leases (5 Fokker 100 leases as at 31 December 2017). Weighted average aircraft age is 3.1 years when including the 5 finance leases

2. Fitch upgraded Avation PLC’s long-term IDR from B+ (Stable) to BB- (Stable) on May 1, 2018

• Avation is a Singapore based aircraft lessor listed on the London Stock Exchange (LSE: AVAP)

• Global participant in the broader commercial aviation sector with earnings and assets denominated in US$

• Portfolio of 38 high demand aircraft (2 widebody, 17 narrowbody, 19 turboprop)

• Weighted average aircraft age of 2.9 years(1)

• Weighted average remaining lease term 7.9 years.

• Diversified customer base of 14 airlines in 10 countries in the Asia Pacific and European aviation markets

• Many of which are longstanding customers of Avation

• Access to equity (LSE listed for 8 years) and debt ($300M bond issuer under current $1Bn MTN program; strong access to bank market)

• Rated BB- IDR (Fitch)(2), B+ CFR (S&P) and BB/BB (Egan Jones/JCR) with improving credit metrics

3

Snapshot of AvationVertically Integrated Platform with Diversified Customer Base and Fleet

Notes


2. Includes US$970.1M of property, plant and equipment, and US$38.4M of assets held for sale, as at 31 December 2017

3. Calculated for illustrative purposes, and excludes consideration of operating expenses, financing cost and potential for lessees to not make contracted lease payments. Net debt calculated as total debt as at 31 December

2017 (US$862.4M) minus total cash as at 31 December 2017 (US$82.8M)

4. As of Oct 2017. Includes Purchase Options and Purchase Rights

Aircraft Weighted Average Aircraft Age(1)

2.9Y

14 Airline

Customers Operating

in 10 Countries

Weighted Average Remaining Lease

Term

38 2.9 Years

7.9 Years US$1BillionFleet asset value(2)

US$859Munearned contracted

revenue

24%/44%/32%split of

widebody/narrowbody/turboprop aircraft by

value

US$623M value

of aircraft on option(4)

US$79M in excess of net debt(3)

Historical Operational and Financial Performance(1)

Continued Evolution to Younger Aircraft Portfolio and Track Record of Financial Expansion

4

Notes

Note: Fiscal year-end is 30 June; half year-end is 31 December. LTM metrics for the 12 months ending 31 December 2017

1. As of HY ending 31 December 2017


Weighted Average Aircraft Age(2)

4.2

3.3 2.9

0.0

2.0

4.0

6.0

FY16 FY17 HY18

Years

Lease Revenue

US$M

Total Assets

831.8 901.1

1,120.0

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

FY16 FY17 HY18

US$M

EBITDA

70.9

94.3 98.7

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

FY16 FY17 LTM HY 2018

US$M

Weighted Average Remaining Lease Term

Years

✓ Increased Scale and Portfolio Size

✓ Young, Attractive Fleet

✓ Long Average Lease Term

✓ Strong Profitability and Cash Flow

71.2

94.2 101.5

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

FY16 FY17 LTM HY 2018

6.8

7.5 7.9

0.0

2.0

4.0

6.0

8.0

10.0

FY16 FY17 HY18

Operational Highlights

5

Growth, Fleet Diversification and Renewal

• Record growth with five aircraft added (>US$310 m)

• Annualized lease rental run rate >US$118 m

• Airbus A320 transitioned from Air Berlin to easyJet in Dec 2017

• First twin aisle (widebody) aircraft delivered into the fleet

• Customer diversification – Six airlines added in FY2018

Funding

• GMTN issue US$300 m unsecured debt in May 2018

Corporate

• Approval at AGM of share buyback

✓ Listed since 2006, and on the Main Market of the London Stock Exchange since 2010

✓ Raised US$53M in equity versus balance sheet equity of US$207M at 31 December 2017

Equity Financing

✓ Purchased 58 aircraft with aggregate purchase price of approximately US$1.5Bn

✓ 6 ATR aircraft on order with additional 30 delivery options

✓ Total of 39 new aircraft deliveries from OEMs

Purchasing

✓ Leased 56 aircraft to 18 airlines over operating history

✓ Total of 15 lease extensions on fleet assetsLeasing

✓ Sold 20 aircraft for aggregate price of US$339M

✓ Converted 7 aircraft to finance lease

✓ Part out of 1 aircraftSales

✓ Total of 19 aircraft acquisitions in secondary market

✓ Traded 4 aircraft purchase options with an aircraft value of US$110MTrading

✓ Transitioned 2 aircraft between airlines and repossessed 2 aircraft

✓ Lease transition from Air Berlin to EasyJet in October 2017

Transition / Repossession

✓ Access to secured debt with 15 active lenders

✓ Unsecured 2021 debt (GMTN): US$300M (May 18)

✓ Rated BB- IDR (Fitch)(1), B+ CFR (S&P) and BB/BB (Egan Jones/JCR) with improving credit metrics

Debt Financing

6

Operational Track RecordDynamic Lessor with 12 Year Operating History

Notes

1. Fitch upgraded Avation PLC’s long-term IDR from B+ (Stable) to BB- (Stable) on May 1, 2018

7

Key Investment Highlights

Attractive Fleet Portfolio Strong Management Team

with Proven Track Record

Established Customer

Relationships with

Favorable Contracts

Improving Credit Metrics

and Sustained

Profitability

Attractive Industry

Fundamentals

1

2

34

5

Attractive Industry FundamentalsResilient Airline Traffic Growth Paired with Increasing Reliance on Lessors

8

(Revenue Passenger kilometers in Trillions)

Oil Crisis Oil Crisis Gulf CrisisAsianCrisis

Financial Crisis

WTC Attack SARS

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Notes

Source: Airbus Global Market Forecast 2017; Flight Ascend Consulting Q2 2017 Commercial Operating Leasing Market Dynamics Report; Flight Fleets Analyzer (in-service and stored passenger single-aisle and twin-aisle types)† The information provided in this exhibit is a reproduction of an exhibit contained in Flight Ascend Analysis’ Q2 2017 report. Neither the Company nor any of the Dealers have independently verified the data contained on the slide and,

therefore, none of them can assure you that such data is complete or reliable. Accordingly, neither the Company nor any of the Dealers make any representation as to the accuracy, adequacy or completeness of the data. Investors should not

place undue reliance on, or base their investment decision on, the information presented on this page

1

+60%

+110%

Operating Lessor Fleet of Passenger Jets†

Operating lessor fleet as % of total fleetPassenger jet fleet managed by operating lessors

0%

10%

20%

30%

40%

50%

0

2,000

4,000

6,000

8,000

10,000

Jan

90

Jan

91

Jan

92

Jan

93

Jan

94

Jan

95

Jan

96

Jan

97

Jan

98

Jan

99

Jan

00

Jan

01

Jan

02

Jan

03

Jan

04

Jan

05

Jan

06

Jan

07

Jan

08

Jan

09

Jan

10

Jan

11

Jan

12

Jan

13

Jan

14

Jan

15

Jan

16

Jan

17

Twin-aisle Single -aisle Share of fleet

Growing Air Travel Demand and Resiliency through Cycles

Aircraft Type Fleet Orders Options

Turboprop Aircraft

ATR 72-600 13 6 30

ATR 72-500 6 - -

Narrowbody Aircraft

A321-200 8 - -

A320-200 3 - -

Bombardier CS300 1 1 -

Fokker 100 5 - -

Widebody Aircraft

A330-300 1 - -

B777-300ER 1 - -

Total 38 7 30

Avation has built a diversified fleet with aircraft portfolio consisting of

approximately 24% widebody, 44% narrowbody and 32% turboprop aircraft by value

9

Attractive Aircraft PortfolioBalanced Fleet Consisting of Young Aircraft

Balanced Fleet with Orderbook and Options to Retain Expansion Flexibility

Turboprop41%

Narrowbody59%

By Aircraft Value

FY

20

17

HY

20

18

Turboprop32%

Narrowbody44%

Widebody24%

2

10

Attractive Aircraft Portfolio (Cont’d)ATR Global Footprint

2

Notes

Source: ATR Marketing Materials 2017

11

Avation’s Latest Fleet Addition – Bombardier/Airbus CS300

Fuel efficient new technology aircraft

2

• Airbus majority owned and supported

• New generation – Inaugural commercial

flight December 2016 (airBaltic)

• Fuel efficient

• > 20 customers (airlines & lessors)

• 594 aircraft in service, ordered or

optioned (as at May 2018)

• Avation early mover – familiar to the

smaller fuel efficient aircraft space

• airBaltic carried it’s 1 millionth customer

on CS300 by April 2018 and had

completed over 10,000 flights

14-200-7

7-14

2.9 3-09-6

6-3

7.9

12

Attractive Aircraft Portfolio (Cont’d)Fleet Metrics

FY 2016 FY 2017 HY 2018

Fleet 38 35 37

Fleet additions (net) 9 (3) 2

Weighted average aircraft age 4.2 years 3.3 years 2.9 years(1)

Weighted average remaining lease term 6.8 years 7.5 years 7.9 years

Young fleet,

reducing risk of

technology

obsolescence

Visibility of cash

flows due to

contracted nature

Notes

Note: Fiscal year-end is 30 June; half year-end is 31 December


Weighted Average Aircraft Age (years)(1) Weighted Average Remaining Lease Term (years)

New Mid Old Long Mid Short

A young fleet with long remaining leases

2

13

Established Customer Relationships with Favorable Contracts

Global Customer Relationships

14 Airline Customers from 10 Countries (including airBaltic and FAT)

3

No lessees based in mainland China

VAA, 26%

VietJet, 21%

PAL, 13%

EVA, 10%

Thomas Cook, 8%

Mandarin, 4%

Air India, 4%

Flybe, 4%

Condor, 3%

Air France, 3%easyJet, 2% Fiji Airways, 2%

14

Established Customer Relationships with Favorable Contracts (Cont’d)

…with New Relationships Driving Customer Diversification

3

Increased Customer Diversification –airBaltic & Far Eastern Air Transport added in 2018

By Monthly Rental

Run Rate Revenue

Top 1 Customer Share – 26%

Top 3 Customers Share – 60%

As at 31 December 2015 As at 31 December 2017

VAA, 56%

Flybe, 10%

Thomas Cook, 9%

Air India, 7%

Air France, 5%

Condor, 5%

UNI Air, 5%

Fiji Airways, 3%

VAA, 36%

VietJet, 23%

Flybe, 10%

Thomas Cook, 9%

Air India, 5%

Air France, 4%

UNI Air, 4%

Air Berlin, 4%

Condor, 3%Fiji Airways, 2%





As at 31 December 2016

Note: Flybe represented 9.46% of monthly rents

but is rounded to 10% for presentation purposes

VAA, 26%

VietJet, 21%

PAL, 13%

Improved Customer Diversity• Fundamental long-term improvement in portfolio

and capital structure

✓ Reduction in customer concentration

✓ Utilization of unsecured funding

✓ Favorable and improved credit metrics

✓ Improvement in scale and age of fleet

Improving Credit Metrics and Sustained Profitability

15

Credit Metrics

Portfolio and Capital Structure Support Positive Credit Profile

Monthly Rental Run Rate



EBIT Coverage FFO / Debt

7.1%

LTM HY 2018

Increasing Reliance on Unsecured(1)

4

1.6x

LTM HY 2018

Notes

Note: Fiscal year-end is 30 June; half year-end is 31 December. LTM metrics for the 12 months ending 31 December 2017

1. Ratios represent unsecured debt as a percentage of total debt. Pro Forma for the assumed issuance of US$300M of unsecured notes (balance sheet data as of 31 December 2017)

0.0%

17.2%

34.1%

12/31/2014 12/31/2017 12/31/17 Pro Forma¹

16

Avation Summary

Attractive Industry Dynamics

Record Fleet Growth

Leading Fleet Metrics

Increased Airline and Aircraft Diversification

Transformation of Debt Capital Structure

Continued Growth Focus in FY2019

Avation PLC (LSE: AVAP)

65 Kampong Bahru Road

Singapore 169370

Phone: + 65 6252 2077

www.avation.net

17

Richard WolanskiFinance [email protected]

Jeff ChatfieldExecutive [email protected]

Important Notice

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN, OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SINGAPORE OR SOUTH AFRICA OR TO U.S. PERSONS

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violation of applicable securities laws.

United Kingdom

This Presentation has not been approved by an authorised person in accordance with Section 21 of the Financial Services and Markets Act 2000 ("FSMA") and therefore it is being delivered for information purposes only to a

very limited number of persons and companies who are persons who have professional experience in matters relating to investments in the United Kingdom: (i) that the Company reasonably believes are of a kind described in

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whom it may otherwise be lawfully given, (in United Kingdom all such persons together being referred to as "relevant persons"). This Presentation must not be acted on or relied on by persons who are not relevant persons.

No offer or invitation or solicitation of any offer to acquire securities of the Company or any new company to be established at the Company's direction is being made at this time nor does this Presentation constitute or form a

prospectus or part of any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA). No recipient of or attendee at this Presentation should deal in or attempt to deal in or

otherwise engage in any behaviour which would or might constitute market abuse (as defined in section 118 of FSMA) in relation to any securities or other qualifying investments to which this Presentation relates. No individual

within the Company or its associates is, by virtue of making this Presentation, encouraging recipients of or attendees at this Presentation to deal in accordance with section 52(2)(a) of the Criminal Justice Act 1993.

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This presentation has not been registered as a prospectus with the Monetary Authority of Singapore. This presentation and any other document or material in connection with the offer or sale, or invitation for subscription or

purchase, of the securities may not be circulated or distributed, nor may the securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in

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Futures Act, (ii) to a relevant person (as defined in Section 275(2) of the Securities and Futures Act) pursuant to Section 275(1) of the Securities and Futures Act, or any person pursuant to Section 275(1A) of the Securities

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(the “Securities Act”)). Securities may not be offered or sold in the United States or to, or for the account or benefit of, U.S. Persons unless they are registered under the Securities Act or exempt from such registration

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General

Some of the statements in this presentation constitute “forward-looking statements” that do not directly or exclusively relate to historical facts. These forward-looking statements reflect the Company’s current intentions, plans,

expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, many of which are outside the Company’s control. Important factors that could cause actual results to differ

materially from the expectations expressed or implied in the forward-looking statements include known and unknown risks. Because actual results could differ materially from the Company’s current intentions, plans,

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18

avation plc investor presentation - … · • airbus a320 transitioned from air berlin to easyjet...

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