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An airline stock firmly in the ascent

Analysts push through material earnings upgrades and the sale of two new aircraft highlights the deep value in this company’s balance sheet
May 20, 2024
  • Disposal of two new aircraft on order with manufacturer
  • Sale supports valuation of purchase rights for 34 aircraft
  • 49 per cent discount to spot NAV estimates

Aircraft leasing company Avation (AVAP:133p), a lessor of 34 commercial aircrafts, has entered a sale agreement with an undisclosed American airline for the purchase of two new ATR 72-600s that are due for delivery in the final quarter of 2024 and early next year.

Including the pre-delivery deposits Avation made to the manufacturer after exercising its purchase rights under a long-term aircraft purchase contract, the company will realise net cash proceeds of $10mn (£7.9mn). The funds are earmarked for pre-delivery payments on a further ten ATR 72-600s that are on order with the manufacturer for delivery from late 2025 to 2028. In addition, Avation has purchase rights for a further 24 aircraft with an extended expiry date of June 2034.

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