Avation (LON:AVAP) reported its half-year results for the six months ended Dec. 31, 2025, highlighting full fleet utilization, ongoing portfolio reshaping, and a major unsecured bond refinancing that management said extended the company’s debt maturity profile. Executives also discussed aircraft market conditions, lease transitions, share buybacks, and an insurance settlement tied to an A220 incident during a Q&A session.
Fleet snapshot and portfolio activity
Executive Chairman Jeff Chatfield said the company owned 33 aircraft at Dec. 31 and had 16 airline customers, with the portfolio “principally a narrow-body commercial aircraft leasehold” by value. The average fleet age was 8.8 years, total asset values were $993 million, and unearned contracted revenues totaled $350 million.
Management emphasized diversification by geography and customer. Chatfield pointed to new lessee names including Clic Air in Colombia, which he said was Avation’s first aircraft into the Americas, and SUM Air in Korea.
Operational highlights cited on the call included:
- Transitioning a Mandarin Airlines aircraft to PNG
- Delivering a new aircraft to SUM Air in Korea
- Transitioning a Mandarin ATR 72 to Clic Air (in January 2026)
- Planning to transition a third ATR 72-600 during March
- Agreeing a four-year lease extension on an A330-300 with EVA, which management described as economically important
Half-year financial performance and non-cash items
Chief Financial Officer Iain Cawte said total income increased by $0.6 million to $56 million, generating EBITDA of $54 million. The results reflected 100% utilization of the fleet and included $10.2 million of maintenance reserve revenue and $2.3 million of end-of-lease compensation revenue.
Operating profit increased by $10.5 million compared with the first half of fiscal 2024. Cawte said operating profit included a $4.1 million gain from the sale of a Boeing 777-300 aircraft, offset by an unrealized loss of $4.2 million from the revaluation of aircraft purchase rights and deposits paid. He noted that the 777 gain followed gains recognized on sales of two ATR aircraft in fiscal 2025, which he said provided evidence of strong aircraft market values.
The company recorded a loss after tax of $4.9 million, which management attributed to $13 million of non-cash adjustments linked to the redemption of bonds in November 2025. Cawte said these charges were not expected to recur and related to IFRS accounting treatment of modifications to bond terms made in 2021.
Balance sheet, refinancing, and capital allocation
Avation said net indebtedness fell by $61.5 million since June 30, 2025, which management said indicated strong cash generation. In addition to reducing net debt, the company spent $10.1 million repurchasing shares and paid cash for an aircraft engine and the final contract price installment for a new ATR delivered in December.
Following the payment of a 1 U.S. cent dividend in October and a net reduction of 4.3 million outstanding shares, Cawte said net asset value per share increased by 7 pence to GBP 2.74.
On funding, Cawte said the key change since June 30 was refinancing unsecured debt with a new $300 million bond maturing in May 2031. The new bond coupon was 8.5%, and unsecured debt represented 50.1% of total debt. He said the company remained substantially hedged against interest-rate risk, with 84% of total debt fixed or hedged.
Total cash stood at $104.8 million at Dec. 31, 2025, and Cawte said the company planned to finance the new ATR delivered in December along with the next scheduled ATR delivery in April 2026. Avation ended the period with 10 unencumbered aircraft with a combined book value of around $180 million, which management said provided flexibility to raise secured funding if needed.
In the period, Avation also reported improved corporate credit ratings, including a new Moody’s rating of B1 with a stable outlook, alongside Fitch and S&P ratings at B.
Order book and market outlook
Chatfield said Avation had nine ATR 72-600 aircraft scheduled for delivery through the second quarter of 2028, including two on 12-year leases to Cambodia Airways. He added that Avation holds 24 ATR 72 purchase rights for delivery by June 2034, citing a Cirium valuation of $552 million for those aircraft “when they exist.” He also described the latest ATR engines as expected to be “100% SAF compatible.”
In discussing market dynamics, Chatfield said global air traffic had returned to 2019 levels, and he described aircraft supply constraints and manufacturer order backlogs as factors pushing airlines to keep aircraft longer. He also said demand for ATR turboprops was strong globally and outlined industry projections he said implied significant long-term need for both replacement and growth aircraft.
Q&A: buybacks, residual values, insurance settlement, and lease transitions
During Q&A, management addressed investor questions about the share price discount to net asset value and potential steps such as higher dividends or a sale. Chatfield said the company had been buying back shares when available at what it considered reasonable prices and when not in blackout periods, and indicated buybacks could continue, while also stressing the need to maintain revenue to service debt.
Asked about unexpected costs during aircraft sales, Cawte said there were none beyond standard legal and transaction expenses, noting Avation typically sells leased aircraft with pricing set via a formula around an economic closing date.
On asset values, Chatfield said commercial aircraft market values were “probably 20% above historically where they should be” due to supply shortages, adding that Avation’s internal valuations were not materially changed by that dynamic. He also said the ability to generate gains on sales suggested aircraft may be undervalued in the company’s books compared with the market.
Management discussed leverage targets, with Cawte noting that industry debt-to-equity is around 3-to-1 and Avation was at about 2.6, while EBITDA-to-interest coverage was 2.6 and management wanted it above 2. Lease yield was cited as 11.5% and expected to remain above 11% in the near term.
Executives also addressed an airBaltic A220-300 described as having suffered a technical fault involving an ozone converter that led to hull damage. Management said the aircraft was unrepairable, the lease ended, and Avation expected an insurance payout at the aircraft’s agreed value matching book value. In a later exchange, management said the aircraft had debt attached; the insurance settlement was $33 million and associated debt was about $19 million, with the difference representing return of equity proceeds.
On fleet transitions, management said two Braathens ATR 72 aircraft were in transition to new customers, with multiple prospective lessees in discussions. Chatfield and Cawte said transition costs were not expected to be material, and management suggested economics could improve by replacing remaining Braathens lease terms with longer-duration leases. Cawte added that one aircraft was “fresh out of maintenance” and ready to lease, while the other had an engine in a shop visit.
Customer concentration was also discussed, with Cawte stating the top customer represented 30% of revenue and the top three combined represented 59%.
About Avation (LON:AVAP)
Avation PLC is a specialist commercial passenger aircraft leasing company owning a fleet of commercial aircraft which it leases to airlines across the world.
