Avation enters agreements over Virgin Australia aircraft

Aircraft leasing company Avation said it had struck a deal on five aircraft that were on lease to Virgin Australia, which entered administration on 21 April.

The London-listed firm said it has agreed to lease two of the former Virgin Australia ATR 72-500 turboprop aircraft to another unnamed Australian commercial airline until the end of 2021, at current market lease rates.

It also said it had signed a conditional letter of intent for one of the former Virgin Australia ATR 72-500 aircraft with an airline customer, for an operating lease period of five years at current market rates.

Additionally, it said it had entered into finance leases for the sale of its last two remaining Fokker 100 regional jet aircraft over the period to September, at a price 6% above book value.

“We are optimistic that Virgin Australia will be sold by the administrator and that the eventual buyer should see the value in maintaining and indeed growing the regional network using Avation's remaining ATR 72-600s as a part of the future business,” said executive chairman Jeff Chatfield.

“We feel it prudent to mitigate our overall risk by selling down and transitioning certain of the aircraft given the uncertainty that surrounds the present Covid-19 environment."

At 1100 BST, shares in Avation were up 2.94% at 175p.