<p>In an AGM trading update, the commercial aircraft leasing firm reported a pre-tax profit for the year to June 30, 2020, of US$14.7mln, adding that lease revenue in the period rose by 14% to US$135.3mln.</p>
<h4><a href=”https://www.proactiveinvestors.co.uk/companies/news/932235/avation-stays-in-profit-and-focuses-on-liquidity-as-airlines-struggle-932235.html” target=”_blank”>READ: Avation stays in profit and focuses on liquidity as airlines struggle</a></h4>
<p>Reporting on its operations from July 1, Avation said it has provided support to 14 of its airline customers during the pandemic with agreements to defer a total of US$13.7mln in lease payments, adding that it has mitigated the impact of this on its cashflow by rescheduling US$26.5mln of loan amortisation. As of December 23, the company said seven airline customers of a total of 19 have returned to normal monthly rental levels.</p>
<p>Meanwhile, Avation said since July 1 its airline customers have begun to return to service, with airlines representing over 79% of unearned contracted revenue flying at greater than 50% of pre-COVID-19 levels, although it said the sector “remains challenged” despite these service levels.</p>
<p>Looking ahead, the firm said the pandemic continues to dominate the industry and it expects that there will be “continuing work” to support airlines as challenges facing the sector continue despite the rollout of vaccines around the world.</p>
<p>Despite this, Avation said it is optimistic about the medium-term opportunity in the sector, particularly for turboprop and narrow-body aircraft, adding that it will “position itself for a return to growth through opportunistic purchases and delivery of its orderbook in a post-pandemic environment”.</p>
<p>”Avation’s team has been managing airlines, bankers and finances on a daily basis in the duration of COVID-19. We have an opinion that air travel passenger movements will exceed previous levels when a treatment or vaccine is deployed, and passengers perceive air travel to be safe. Therefore, post COVID-19 we remain optimistic and expect significant opportunities for a rapid return to growth”, executive chairman Jeff Chatfield said in the AGM statement.</p>
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<p>On Friday, the specialist air services group confirmed it had received two approaches from private equity groups,</p>
<p>One was from Blackstone and the other from Global Infrastructure Partners, but that was for a cash offer at a lower price and was rejected.</p>
<p>In a statement Monday, Signature said: “Having considered the terms of the Blackstone Proposal, the Board of Signature has indicated to Blackstone that it would currently be minded to recommend a firm offer for Signature at the price set out in the Blackstone Proposal.”</p>
<p>Signature noted that this latest bid is the sixth it has received from Blackstone with the first approach made in February 2020.</p>
<p>The 386p per share offer values Signature at around £3.2bn and is a 44% premium to the price on December 16, 2020, when the offer period began.</p>
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<p>In a note on Thursday, the bank said they expected the rebound in air travel will be “strong once travel restrictions are lifted”, although they cautioned that volumes were unlikely to return to 2019 levels by the summer.</p>
<h4><a href=”https://www.proactiveinvestors.co.uk/companies/news/935737/easyjet-up-to-buy-as-deutsche-bank-says-low-cost-airlines-can-emerge-stronger-from-crisis-935737.html” target=”_blank”>READ: easyJet up to buy as Deutsche Bank says low cost airlines can emerge stronger from crisis</a></h4>
<p>Morgan Stanley said Ryanair, which it raised to €18 from €15.60 and retained at ‘overweight’, was a “structural winner” with less potential downside in case the recovery in demand took longer to materialise.</p>
<p>“We think for some stocks, the rerating could be justified, as the financial negative impact of the Covid crisis is driving some of their peers to look to reduce their fleets and focus on the most profitable routes, leaving a window opportunity for the financially stronger players, with a low cost structure, to grow faster by taking share from competitors that are retrenching”, the bank said, adding that Wizz was in a similarly advantageous position to Ryanair, and increased its target for Wizz to 5,000p from 4,200p and retained the ‘overweight’ rating.</p>
<p>However, should the air travel sector recover quickly, Morgan Stanley said easyJet “looks more attractive” if airlines managed to achieve peak unit profits and trade at peak multiples, and increased their target price for the carrier to 900p from 800p and held the rating at ‘equal weight’.</p>
<p>Shares in Ryanair were 0.9% lower at €15.84 in late-morning trading, while Wizz Air rose 0.3% to 4,613p and easyJet dropped 1.5% to 827.2p.</p>
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