Customers request payment relief from Avolon

Monday, April 6, 2020

The Dublin-based aircraft leasing company, Avolon has revealed that in light of the coronavirus pandemic and its impact on the aviation sector, the majority of its customers are now seeking rent deferrals or reductions. The company declared this to be the most challenging period in the history of commercial aviation.

Avolon said in a statement that the company has received requests from more than 80% of its current owned and managed customer base for relief in the first quarter itself. Customers have asked for relief from payment obligations under their leases. It also mentioned that these lessees account for more than 90% of rental cashflow contracted annually out of the current owned and managed fleet.

Domhnal Slattery, Chief Executive, Avolon said in a recent press statement that the commercial aviation industry is facing. He mentioned that Avolon is working closely with its global customer base to provide required support in the time of crisis. He shared that the company is well-positioned to deal with the challenges caused by COVID-19 and the critical state of the current market environment due to its strong liquidity, low debt and diversified portfolio.

He further added that the company has acted swiftly and decisively to address the market outlook. He also said that Avolon has re-profiled elements of its order book to better align with market conditions. He concluded that despite not witnessing a crisis of this nature, the company is that the airline industry will recover once the effects of coronavirus come down.

Around the end of March, Avolon had agreed to provide rent deferrals for an average of three months. It also assumes that more relief requests would arrive in the forthcoming day. There is also a probability of several lessees falling behind rent payments.

Avolon has drawn down a $3.2 billion unsecured credit facility to bolster its cash reserves. As a strict response to the sector disruption the company has also given access to over $5 billion of liquidity. It also cancelled orders for 75 Boeing 737 Max jets and four Airbus A330neos. The delivery of 25 narrowbody aircraft has also been deferred.

The company aims to reduce aircraft commitments between 2020 and 2023 as the net impact of its actions in the first quarter. They plan to reduce 284 aircraft in the year-end to 165 aircraft immediately and continue implementing reductions to their near-term capital commitments. However, Avolon remains committed to the 737 Max in the longer term.

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