Around 50% of the world's commercial airline fleet is owned by lessors, who, in many cases have nursed distressed airlines through the pandemic. With airlines generating little or no cash, lessors have deferred or suspended lease payments to keep their customers afloat and their aircraft ready for better times. Those better times are here, and lessors are starting to reap the rewards of their strategic patience and accommodation.
Based in Ireland, with offices in the US, Dubai, Singapore, Hong Kong, and Shanghai, aircraft lessor Avolon has released its update for the second quarter of 2022 (Q2). At the end of June, Avolon owned and managed a fleet of 591 aircraft, with 146 airline customers operating them in 62 countries.
A majority of the Avolon fleet are Airbus aircraft
According to ch-aviation.com, Avolon currently has a fleet of 594 aircraft, comprised of 69% Airbus and 31% Boeing aircraft. There are 464 single-aisle aircraft, including 223 Airbus A320ceo and 85 A320neo family aircraft, plus 19 Boeing B737 MAX 8 and 137 B737 aircraft. Other aircraft in the portfolio are A330ceo and -neo, A350, B777, and B787, plus two Airbus ACJ319 executive jets. Avolon says it has orders and commitments for 260 fuel-efficient, new technology aircraft. Lessors are a significant part of commercial aircraft sales, and, as an example, the May Airbus Orders and Deliveries report lists that 21% of the backlog, or more than 1500 aircraft, were for lessor orders.
During the April-June period, Avolon executed 54 lease transactions, which included leases for new aircraft, follow-on leases and lease extensions. It entered into Letters of Intent for the sale and leaseback of 13 aircraft and the placement of 31 aircraft from Avolon's order book. In Q2, Avolon sold two airplanes and entered into binding agreements to sell another 30 aircraft. One aircraft was delivered in the quarter, an Airbus A330neo, to the Philippines-based carrier, Cebu Pacific Air. This is the airline's third A330neo, and it will add more widebody capacity to the five A330-300s in the fleet. Cebu Pacific has an all-Airbus fleet of 53, with a mix of 45 ceo/neo A320 family aircraft, plus the A330s.
Avolon is delivering today with an eye on the future
Despite the impact of COVID, Avolon generated a net income of $47 million (€46.1 million) in 2021, executed 228 lease transactions, delivered 49 new aircraft, and transitioned twenty-three. In 2021, it added 14 new customers, sold 24 aircraft and entered into sales and lease back Letters of Intent commitments for 45 aircraft. With an eye on the growth in cargo, Avolon became the launch customer, in partnership with Israel's IAI Aviation Group, for 30 A330-300 passenger-to-freighter (P2F) conversions. This will be the first P2F conversion of an A330-300, with delivery expected between 2025 and 2028.
Avolon's order for 500 Vertical Aerospace VX4 eVTOL aircraft is even more futuristic, valued at $2 billion. In the 2021 annual report, CEO Dómhnal Slattery said that,
"More than 70% of the 500 aircraft are placed with leading airlines GOL and Japan Airlines. We believe that there is a strong appetite from airlines across the globe to be part of this industry change, and we look forward to continuing to work closely with them as we decarbonize air travel and transition to a net-zero carbon economy."
Avolon is looking to the future while maintaining its market share and supporting its airline customers. Barring any new seismic shocks, it is well-positioned for a successful 2022 and beyond.
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