Avation Share Discussion Threads

[russman] 04/6/2020 19:11

A token effort; need to think bigger.
Either take out a jumbo mortgage and tender for all 2021 bonds.
or
Find an investor / asset manager with deep pockets, offer them a prefs & warrants mix. A deal they cannot refuse; then tender for all the 2021 bonds.
Removes the bond repayment deadline; gearing no worse.

[catsick] 04/6/2020 16:29

If the bonds are being bought at 76 cents thend the bond markets don't think they will be repaid easily in 2021 and the equity should not be worth a lot , bond market is usually a better read than the equity market....

[qs99] 04/6/2020 08:10

For those aviation fans, take a look at AIR this am.....DYOR naturally!

[russman] 02/6/2020 10:43

Pls ask him where the $350m will come from next year.

[aim_trader] 02/6/2020 10:10

Avation FD Richard Wolanski will be presenting at the Proactive One2One Virtual Forum taking place on Thursday 4th June from 6pm. Registration and details here:

[russman] 28/5/2020 19:47

AVAP capital structure is top heavy due to timing of the bond repayment.

[fastbuck] 28/5/2020 17:50

Taken from an interview between Jim Cramer & Air Lease Exec Chairman last night:

c. 400 Planes
Background $40 stock, $8 bottomed, now $30

Short-term help offered to airlines in March, April & some into May, with a quick payback

Airlines will begin to generate much higher volume of revenues

'We believe the recovery will be alittle quicker than the so called experts have pronounced'

[russman] 28/5/2020 09:36

Jeff better sort out the capital structure as his first priority.

[sogoesit] 28/5/2020 07:46

Looks like, post cvd19, business for lessors will be on an increasing path as outlined by EZJ today (sale and leasebacks).
How profitable, and risky, that proves to be remains to be seen but risk and profitability “should” go hand-in-hand.

EZJ announcement here:

[fastbuck] 26/5/2020 12:07

Positive news for Virgin Australia's leasors -

The airline's administrators Deloitte said in court documents filed on Monday in the Federal Court they had reached an agreement with the groups that provide aircraft leasing finance to Virgin.

httpx://www.smh.com.au/business/companies/virgin-s-administrators-put-brakes-on-plane-repossessions-20200525-p54w7p.html

[sogoesit] 19/5/2020 12:13

I'm surprised, in the current environment, the company sale process has not come to a halt.
Not sure what to make of that.

[fastbuck] 18/5/2020 20:35

Positive news today, most would agree with.Our only 737-800 which was 8 years old when purchased last year and flying with Garuda was extended from its original 2022 term to 2028.Naturally as we acquired the aircraft towards the end of its lease any extension would be presumably be on lower terms reflecting the age of the aircraft.

[russman] 18/5/2020 10:56

& don't forget Easyjet.

[quepassa] 18/5/2020 10:06

"We feel it is prudent in terms of risk mitigation to extend the duration of this lease to the year 2028, given the uncertain near term outlook for mid-life narrow body commercial passenger aircraft."

Today's RNS.


NOTA BENE:-

"the uncertain near term outlook for mid-life narrow body commercial passenger aircraft"



ALL IMO. DYOR.
QP

[quepassa] 18/5/2020 10:01

NOTHING I WROTE WAS INACCURATE.

STOP TRYING TO FIND FAULT.

IF YOU THINK NEGATIVE EQUITY IS MEANINGLESS, THINK AGAIN

[cc2014] 18/5/2020 09:59

Under accounting rules the company is required to value assets at the lower of cost or "reasonable value". The directors can choose which, so if you buy a property you can value in the accounts at cost for forever as long as the value of the property is clearly going up. However, if the value of the assets falls below cost it must be immediately revalued in the next set of accounts at "reasonable value". Decided what the reasonable value is will be a matter of judgement.

The transaction does flow through the P&L.


At a practical level:

1. If you lease a plane and the lease is still getting paid it would be reasonable not to reduce the value of the asset in the books as you are still getting the revenue stream for it.

2. If you lease an plane and the lessee takes a payment holiday of 3 months and there is still 10 years left of the lease and there is a real prospect they can making up the payments, you would not reduce the value of the asset (although you might consider an increased provision for bad debts)

3. If the situation is the same as number 2, but there's only 3 months left on the lease, it's all about judgement.

3. If the lessee is unable to make payments/in administration or you are about to agree to a lower montly lease payment, then a review of the value of the asset will be required.

[catsick] 18/5/2020 09:19

There is a mark to market book value in the accounts but it does not go through the pnl , you will see a huge change in value for the a320s and 350 etc , there is going to be no bids for the larger planes ...

[fastbuck] 18/5/2020 09:18

To remind you, you said 'That's going to hit valuations hard. And a BIG QUESTION is how and when leasing companies will reflect those diminished aircraft valuations in their figures. It's nice to record valuation gains but a bitter exercise to record valuation losses.'

But that was inaccurate - save for the options that AVAP valued which was a mistake.

Certainly you don't write down a performing asset, all/near all of our assets are with airlines generating a contracted return far above our cost of capital. Lets assume that continues as airlines are in business to fly, then the asset is now worth more than its cost, its worth the excess of the rental income vs cost of capital plus any residual value at the end of the lease (which will be well write-down in AVAPs books through depreciation).

Admittedly there are risks out there, but at the 100p - 160p share price range in the last month there could be plenty of upside.

[quepassa] 17/5/2020 16:09

Yes,

But if you bought a house for a million and it's only worth 750k because the market has crashed, you know it, your financiers know it and so does everybody else. Doesn't help.

Nor does it help if you want to retire/sell/trade that asset.

[fastbuck] 17/5/2020 14:29

Aircraft are not revalued up or down by AVAP and presumably the lease industry as a whole. Normally only time there is any recognition of a plane is when it's sold.

[quepassa] 16/5/2020 08:49

Excellent summary.

You see that's the killer for the aircraft leasing sector in general.

Pre-owned Airplane prices have plummeted. Combined with a devastated demand for rentals. A toxic lending situation for any asset class.

That's going to hit valuations hard. And a BIG QUESTION is how and when leasing companies will reflect those diminished aircraft valuations in their figures. It's nice to record valuation gains but a bitter exercise to record valuation losses.

So glad I sold at 300p at the crisis outset.

Good Luck All.


ALL IMO. DYOR.
QP

[catsick] 16/5/2020 08:02

The prices of planes will be down 30-90% , even the turboprops wont escape, I am fully out of this now, its been a great ride with 20% irr on my position over7 years of holding, well run company but with a highly leveraged balance sheet they won't escape ... below is just a taste of the carnage ..-Virgin fires more than 3,000 people including 600 Pilots.- Virgin Australia files for Bankruptcy.- Air Mauritius goes into Administarion.Cin- South African Airways Bankrupt. - Finnair returns 12 planes and lays off 2,400 people. - YOU grounds 22 planes and fires 4,100 people.- Ryanair grounds 113 planes and gets rid of 900 pilots for the moment, 450 more in the coming months.- Norwegian completely stops its long-haul activity!!! The 787s are returned to the lessors.- SAS returns 14 planes and fires 520 pilots... The Scandinavian states are studying a plan to liquidate Norwegian and SAS to rebuild a new company from their ashes.- Ethiad cancels 18 orders for A350, grounds 10 A380 and 10 Boeing 787. Lays off 720 staff.- Emirates grounds 38 A380s and cancels all orders for the Boeing 777x (150 aircraft, the largest order for this type). They "invite" all employees over 56 to retire - Wizzair returns 32 A320s and lays off 1,200 people, including 200 pilots, another wave of 430 layoffs planned in the coming months. Remaining employees will see their wages reduced by 30%.- IAG (British Airways' parent company) abandons the takeover of Air Europa (and will pay €40 million compensation for that).- IAG (Iberia) grounds 56 planes.- IAG (British Airways) grounds 34 planes. Everyone over 58 to retire.- Luxair reduces its fleet by 50% (and associated redundancies)- CSA abolishes its long-haul sector and keeps only 5 medium-haul aircraft.- Eurowings goes into Bankruptcy- Brussels Airline reduces its fleet by 50% (and associated redundancies).- Lufthansa plans to ground 72 aircraft (in two instalments).- Hop is studying the possibility of reducing fleet and staff by 50%.Additional info:Currently, 60 new aircraft stored at Airbus with no buyers in sight (order cancellations) including 18 A350s.They forecast a minimum of 8,000 grounded planes by September. With an average of 5.8 crews per plane (medium and long haul combined), that would make more than 90,000 unemployed pilots worldwide.The Air Transport Industry is on Life Support !

[a_game] 13/5/2020 09:33

Virgin will be sold and the ATRs will be some of the first aircraft back flying again. I have little concern about the VA fleet. We're well positioned with ATR aircraft given domestic flying will be the first to recommence.

[fastbuck] 13/5/2020 09:05

Very good point that I didnt fully appreciate Harrogate.

There are still challenges but challenges are being brought forward with the re-deployment of the Virgin ATR-500s some clarity once Virgin is sold you might expect and planes back in the air.

Outside the Virgin aircraft others that may fall into the expiry bucket will be the Air France A320 I believe. Anyone have a accurate list?