Avolon cancelled orders for further 27 Boeing aircraft in three months to June 30th
Irish aviation lessor had already cancelled orders for 75 Max aircraft in the first quarter of this year
Dublin-headquartered Avolon cancelled orders for 27 Boeing 737 Max aircraft due for delivery from this year to 2022
Irish aviation lessor Avolon cancelled orders for a further 27 Boeing aircraft in the three months to June 30th, the company said on Tuesday.
Avolon, which buys aircraft and leases them to airlines, said five customers had fallen behind with rents during the second quarter of the year or sought further deferrals of payments due to the Irish company.
Dublin-headquartered Avolon cancelled orders for 27 Boeing 737 Max aircraft due for delivery from this year to 2022. Avolon had already cancelled orders for 75 Max aircraft in the first quarter of this year.
The 737 Max is awaiting certification from safety regulators in the US and Europe.
During the second quarter seven of 12 Avolon airline customers that had deferred rents fully repaid the Irish company.
Between the end of June and July 3rd, Avolon said it had received $47 million due from customers during the second quarter. The lessor had agreed in the second quarter to defer rents for many of its airline customers. As a result the company collected 68 per cent of the rent due on its aircraft.
Avolon said around two-thirds of the 32 per cent shortfall was due to deferrals agreed with clients.
The company had $5 billion in cash and undrawn secured debt at the end of June. It said it had cut its spending commitments up to the end of 2021 by 34 per cent, and by 52 per cent over the period to 2023.
Dómhnal Slattery, Avolon chief executive, described the second quarter as a challenging one for aviation. “The months ahead will be difficult, but we have the experience and balance sheet to manage through these headwinds.”
At the end of June, Avolon owned or managed 547 aircraft, and had ordered a further 277 from manufacturers. It had 145 airline customers in 62 countries.
Meanwhile, it emerged that Chinese conglomerate HNA, which owns 52 per cent of Avolon’s biggest shareholder Bohai Leasing, received Covid-19 cash support from the US government.
Reports said the federal govenment loaned both HNA North America and HNA New York between $350,000 and $1 million each.
The money is meant to aid US companies struggling with the fallout from the pandemic to pay their workers.
The Chinese government is in the process of rescuing HNA, which is heavily in debt following a buying spree.
Avolon has never commented on HNA’s woes.