Good afternoon, ladies and gentlemen. Welcome to the Avation PLC 2022 financial year results and investor update conference call. My name is Mark, and I'll be your conference moderator for today. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Just simply type in your questions at any time and press Send. The company may not be in a position to answer every question received during the meeting itself. However, the company review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we would like to submit the following poll, and if you give that your kind attention, I'm sure the company will be most grateful. I'd now like to hand over to Duncan Scott, Group General Counsel.
Good afternoon.
Thank you, and good afternoon, everyone. Today on 29th of September, Avation published its unaudited financial results for the financial year ended 30th of June 2022. A copy of our earnings release is available on our website at www.avation.net. This conference call is being webcast and recorded, and the webcast will be available for replay on our website. Please note that certain statements in this conference call, including answers to your questions, are forward-looking statements, including without limitation, statements regarding our future operations and performance, revenues, operating expenses, other income expense items. These statements and any projection as to the company's future performance represent management's estimate of future results and speak only as of today, 29th of September 2022. These estimates involve risks and uncertainties that could cause actual results to differ materially from expectations.
Further information on the factors and risks that may affect Avation's business are included in Avation's regulatory announcements from time to time, including its annual report and half-year results announcements. Avation assumes no obligation to update any forward-looking statements or information in light of new information or future events. Unauthorized recording of this conference call is not permitted. I will now hand over to Executive Chairman, Jeff Chatfield.
Thank you, very much for your time. In the year ended 3rd June 2022, Avation has returned to profitability. Increased net asset value per share, maintained liquidity, lowered net debt, and developed its new CO2 strategy. The company is positioned to execute its business strategy as the aviation sector recovers from the pandemic. There has been a significant recent recovery in passenger numbers in the airline industry. The company is optimistic about a future for the leasing industry, characterized by high demand for aircraft as the global fleet transitions to low CO2 technology in the coming years. Fleet utilization has improved as unused aircraft are being transitioned. Significant impacts of airline insolvencies and restructurings have mostly been reflected in previous periods, and distributions to creditors from these insolvencies are now being received.
The company is increasing levels of interest from airlines to buy or lease aircraft at sustainable lease rates. Senior lenders willing to lend against aircraft assets. These factors confirm the emergence of an industry from the pandemic. The company's strategy will be focused on leasing modern low CO2 emissions, fuel-efficient aircraft in the future. Avation is supportive of the aviation industry's goal of becoming more sustainable through a transition to new technology, more fuel-efficient aircraft engine, and the use of sustainable aviation fuel. The company will position itself to return to growth through opportunistic trading and deliveries from its order book in the post-pandemic environment. As at 30 June, the company had 39 aircraft in the fleet, serving 17 different customers in 14 countries. Avation owns regional narrow-body and twin-aisle aircraft.
The fleet is split 17% wide-body, 52% narrow-body, and 31% turboprop by value. The aircraft fleet has a 5.6-year weighted average age and a 5.7-year weighted average remaining lease term. Avation has total assets in excess of $1.2 billion. Attached to that fleet is $507 million in unearned contracted lease receivables from existing operating leases and a further $61 million in finance lease receivables. That's over $568 million in receivables on remaining leases with which to repay debt. At that point, on average, the fleet will still be less than halfway through its life.
The company has begun positioning itself for the eventual transition of the industry with aircraft using 100% sustainable aviation fuel to produce low CO2 emissions on a net basis. Low CO2 emissions will advantage airlines in terms of taxes and government regulation. The company is engaged in a number of campaigns driven by the airlines wanting to increase and renew their fleets for delivery of new aircraft. Aviation's fleet at 30 June is dominated by fuel-efficient regional and narrow-body aircraft. It's these sectors that are fastest in their return to service from the pandemic.
83% of Avation's fleet is focused on regional and domestic travel, which is close to returning to 2019 pre-COVID levels. Avation believe newer aircraft carry a lower risk of obsolescence, provide greater long-term cash flow service debt through long-term leases, and importantly, will continue to deliver improvements in emissions and sustainability in the airline sector as it moves to a carbon neutral future. Avation holds orders for two aircraft and purchase rights of 28 ATR 72-600 aircraft. This access to new aircraft represents a growth asset that has increased in value during the financial period as customer demand drives airlines to increase capacity and provides investors with a visible pathway to Avation's future growth. Avation has returned to a high level of operational efficiency, which simply means that a high percentage of the fleet is generating rent.
Today, Avation has four unutilized aircraft as a result of repositioning or selling 17 of the 21 aircraft that we returned from customers during the pandemic. We have strong interest in the remaining aircraft, and our expectation is that we will sell or lease these remaining unutilized aircraft in the short term. Avation has reviewed the values of aircraft in the fleet and reversed some of the impairment, increased the overall value of the fleet. The increase in valuation only represents a small recovery of the impairment taken during the pandemic. As the world continues to emerge from the pandemic, demand for aircraft is expected to continue increasing. As airline travel continues to gain strength, improvement in lease rates may lead to further increases in aircraft value in the future. The next slide shows airline customers. Today, we have 17 customers in 14 countries.
Avation's customers include five flag carriers. These flag carrier airlines appear to have been more resilient as they typically received support and continue to service domestic routes. As countries have moved beyond the peak of the pandemic, domestic travel has recovered faster than international air travel. It is important to note Avation's geographical spread of customers, the pandemic impacted different areas at different times. Around two-thirds of Avation's customers by revenue are located in Asia, with the remainder in Europe, where our largest customer, airBaltic, has been performing well. The PAL restructuring plan became effective on the thirty-first of December 2021. Pursuant to the restructuring plan, PAL has retained a Boeing 777-300ER aircraft on lease from Avation in accordance with the plan. The lease for this aircraft will continue until the original scheduled termination date.
PAL has met its commitments under the restructuring agreement and continues to meet the ongoing lease terms. As we've been able to conserve the majority of our customers, fleet team and business model through the pandemic, we believe Avation's business is largely intact. Avation has no, and never has had any direct exposure to Russia or any RussIan airline. Avation is currently not aware of any sanctions resulting from the invasion of Ukraine that will impact the company. Avation is a focus on new or young aircraft and therefore is a natural seller of mid-life aircraft. I'll now hand over to Richard to run through the FY 2022 results.
Thanks, Jeff. The next few slides of the presentation provide a summary of our FY 2022 financial results. Further detail is included in today's stock exchange announcement, which is also available on the company's website. Onto the financial 2022 summary. During the financial period, Avation generated total income of $116.4 million with revenue of $112.2 million. Operating profits saw a dramatic turnaround to $90.2 million profit from a loss of $62.7 million in 2021. Profit before tax, before non-cash loan modification charges, saw a $150 million turnaround to $34.9 million from a loss last year of $120.5 million.
We have highlighted profit before tax number pre these charges due to the material non-cash charges skewing the profit or loss as a result of loan modifications and their treatment under IFRS 9. The extension of the maturity date and other revisions to the terms and the conditions of the notes were accounted for as a substantial modification of the terms of a debt instrument in accordance with IFRS 9, which led to a non-cash gain being recognized of $50 million in the statement of profit or loss in the year ended 30 June 2021. Under IFRS 9, this gain is required to be amortized over the term of the extension of the notes.
Investors should note that the current financial year ended 30 June 2022. Amortization of this gain led to a non-cash charge of $8.8 million being recognized as a finance expense. In addition to this, a further non-cash charge of $3.5 million was created when Avation successfully extended the aircraft loan warehouse facility to 30 September 2026. As a result of this, total profit after tax of $17.1 million was earned, which is a significant turnaround from a loss of $84.9 million in the corresponding period last year. Total assets declined by 5% to $1.21 billion. However, net indebtedness was able to be reduced by 14% to $793 million. Down from $923 million the previous year.
Earnings per share were $0.247 for the period, up from a loss of $1.312 last year. NAV per share rose by 63% to GBP 2.68 from GBP 1.64 a year ago. Onto the operational highlights for the financial year 2022. The company managed to sell five aircraft including an Airbus A220, an Airbus A321, and three of the ex-Virgin Australia ATR 72 aircraft. A further two ATR 72 aircraft were returned and are in the process of being sold with completion next month. Two aircraft leases were extended with Hevilift and the third ATR 72 was leased to Hevilift as well. The PAL restructuring was completed with the airline retaining the Boeing 777-300ER, as Jeff just mentioned.
Another ex-Virgin Australia ATR72 was leased with the delivery to a new customer occurring this month. Another lease on an Airbus A320 was extended by 44 months with easyJet. A couple of aircraft transitions as well. Boeing 737 was repossessed, and we're remarketing that aircraft now. An Airbus A320 was returned, and that has been transitioned already to a new customer. The next Golden Myanmar ATR72 aircraft is recovered and is being transitioned to a new customer with expected completion next month. In addition to this, as I mentioned, the aircraft warehouse loan facility maturity date was extended to 30 September 2026. On the following slide, we have a quick debt analysis on our debt position, which has improved significantly over the past year.
Total loans and borrowings, current and non-current, dropped by 13% to $828 million from $948 million a year ago. Net indebtedness has declined by almost $130 million since 30 June 2021 to $793 million, down from $923 million. There was an increase in the weighted average cost of the group's secured debt facilities to 4%, up from 3.9%, as a result of repayment of some lower cost debt that increased the number of unencumbered aircraft in the fleet in the period. The weighted average cost of debt for the company increased to 5.7%. At the end of the year, 89% of total debt was at fixed or hedged interest rates.
Avation's net debt to assets ratio improved significantly to 65.1% over the past year from 73.9%. The chart at the bottom of the page shows the evolution of the group's cost of debt over the past nine years. On the next slide, we've provided some key ratios for a comparative basis. The net asset value per share saw a significant increase of 45% to $3.27 from $2.26 last year. That's in US dollars. As a result of the weakening of the pound against the greenback, this saw the NAV per share in pounds increase 63% to GBP 2.68 from GBP 1.64.
As of the date of this release, with the pound weakening further since the end of the financial year, measured at today's exchange rates, the NAV per share approximates GBP 3.06. This is important as the US dollar is Avation's functional currency as most aircraft leasing transactions, purchases, sales, and lease agreements are in US dollars. Lease yields decreased slightly to 9.6% from 10.3%. Administrative expenses on a cash basis, excluding warrant expense, increased to 7.2% from 6.6%. Still, by comparative standards in the industry, quite low. Debt to equity saw a large improvement to 3.6x from 6x over the past year. Net debt over EBITDA saw a similar improvement to 7.6x versus 12.5x as at 30 June 2021.
Debt to total assets dropped to 68% from 73.9%. EBITDA, as a function of interest expense, also improved to 1.9x from 1.4x a year ago. The next slide will provide a summary of Avation's liquidity position. The maintenance of that liquidity position has been Avation's key focus during the pandemic, as we've noted a number of times in these past conference calls. Cash has been preserved over the past couple of years during a period of extreme uncertainty, when a significant proportion of the fleet was unutilized and the remaining airline customer debtors were building. This was a difficult exercise, and we are now fortunate that it will not require the focus and attention it has as the industry continues to return to more positive operational conditions.
The unsecured bonds have a maturity date of 31 October 2026, and are callable at any time. Avation has made an opportunistic repurchase of the unsecured bonds just after the completion of the financial year, following the direct approach from a bond holder. Cash collections are returning to normal, with the cash collection rate running at 108% for the year ended 30 June 2022, which is a significant improvement over the last financial year, where the cash collection rate was 67%. The company also has three unencumbered aircraft as at 30 June. Liquidity is expected to continue to improve in the first half of the new financial year, beginning with the completion of the sales of two ex-Loganair ATR aircraft.
In the second- half, with regular, significant repayments of some of the deferred rent from the pandemic period. Other positive cash flows can potentially include further aircraft sales, which could include any of the unutilized aircraft, being the Boeing 737 and the two ATRs that we are currently remarketing. Collections of debtors from customers, the opportunity to re-refinance existing aircraft in the fleet, and collections from the Virgin Australia insolvency and potential realization of the Philippine Airlines shares that we hold. Avation's claim against Virgin Australia has been adjudicated by the trustee of the creditors trust in the sum of AUD 101.4 million. Avation was notified of an initial distribution from the creditors trust of 5.4 in the dollar on 15 September 2022 in respect to the claim.
A further distribution based on funds withheld by the trustee is also expected. In addition to this, further funds may be made available to creditors should Virgin Australia meet performance targets in the financial year ended 30 June 2023. The potential total of these additional distributions is estimated to be in the range of $0.01-$0.02 . On to the next slide, which shows our liability structure and loan maturities. On this slide, we show the coming years, the loan maturities. The secured debt loan maturities in blue match the underlying lease terms of aircraft, and obviously are manageable and will pay themselves off. The orange maturity represents aircraft warehouse loan facility, which Avation successfully extended out to 30 September 2026.
As such, there is no cash crunch as a result of senior debt coming as a result of the loan amortization restructuring Avation has negotiated with senior lenders as part of our COVID-19 coping strategy. There is also a long pathway to maturity of the unsecured bonds represented in green out to October 2026. Loan maturities are typically aligned with lease terms and with a long average lease duration of 5.7 years. Most of Avation's senior debt, which makes up close to 60% of total debt, has significant duration. Avation confirms that it is current with all payments to secured lenders. Avation either complies with or has received waivers with all senior bank loan covenants.
Avation is in discussions with senior lenders to permanently amend or remove some covenants that no longer reflect the current capital structure. I'll hand back to Jeff for the final couple of slides that talk about the company's strategy and pathway forward.
Thank you, Richard. Avation's strategy during COVID was to preserve liquidity and reposition or sell aircraft returned from customers as they occurred, which has basically been successful. The implementation of this strategy has enabled the company to materially lower net indebtedness, support our customers' survival, maintain adequate liquidity, and keep the core business intact. Now that the industry is returning positively with opportunities increasing, the company will transition to a more forward-looking strategy that is intended to return the company to the growth and profitability experienced pre-COVID. The return of air travel and the confirmation of passenger demand around the world has surprised to the upside in the past couple of months.
This, combined with the expected further reduction in unutilized aircraft, represents an opportunity for Avation and its investors to focus on the future rather than the recent history of having to react to problems and obstacles inflicted by the pandemic. We have developed a very sensible low CO2 strategy for the company going forward. In 2023, the focus is to position, transition, sell, phase the last three unutilized aircraft, maintain a focus on liquidity. There is significant opportunities around the ATR-72 order book with the new Pratt & Whitney PW127XT engines. The commercial team is now able to focus on the new opportunities for the order book rather than just transitioning repossessed aircraft. Clearly, the team will be able to focus on new customers rather than repossessing and transitioning aircraft. The strategy, this is very important.
The company's got a focus on low CO2 emission aircraft. There's low CO2, the fuel-efficient aircraft becoming available in all types, but the first one that's been successful is the ATR-72, where we have seen one of our customers demonstrate commercial aircraft flying on 100% sustainable aviation fuel. Gradually, over years, we expect that we'll trade out of older aircraft types and focus on aircraft types such as the NEO and the A220 series, in addition to the ATR-72, with the recently announced new generation engines. I should make the claim that all of our order book, the orders for those aircraft in future all have this, the new engines, the PW127XT.
Which is very important, because the engine itself provides a 20% lower maintenance cost, extended time on wing, 3% lower fuel consumption, 5% more power than the current engine. The manufacturer expects that the PW127XT engine will be certified to operate with 100% sustainable aviation fuel in the nearest term. When using sustainable aviation fuel, net emissions of CO2 are reduced by 80%. Which is very important because obviously regulations and governments are forcing low CO2 operations on airlines. Avation supports and is committed to the eventual transition of the industry towards aircraft using 100% sustainable aviation fuel to produce low CO2 emissions on a net basis. Low CO2 emissions will advantage airlines in terms of taxes, government costs, and are also key to providing a substantial, sustainable future for global aviation.
In conclusion, the disruption created by the COVID-19 pandemic is receding following a successful rollout of vaccines and other things. This has supported the return to increased levels of air travel. This trend is evident in regional and domestic travel passenger numbers and is being followed by recovering international travel. The completion of the restructuring by Philippine Airlines, the payment of the initial distribution from Virgin Australia, and the extension of our aircraft warehouse facility resolves some of the key remaining issues generated by the pandemic. Avation is set to emerge from the pandemic with a smaller fleet, with higher levels of utilization and a long timeframe for the repayment of the company's unsecured notes and warehouse. Cash flow from operations continues to improve to normal trading conditions as countries open up.
Avation's largest five customers, which make up almost 70% of the revenue, were current with or in compIiance with repayment plans as at 30 June. Cash flows for the remainder of the financial year will be boosted through the settlement of announced aircraft sales and expected further sales of unutilized aircraft, collections from insolvency proceedings relating to Virgin Australia and Philippine Airlines, and collections of outstanding amounts related to rent deferral arrangements and the increase in receivables as a result of COVID-19. There are likely to be opportunities to buy aircraft from airlines and lessors looking to adjust or reduce their portfolio, which Avation is positioning itself to take advantage of in future years. Avation is optimistic about the long-term opportunity for airline travel, particularly in the low CO2 turboprop and narrow body aircraft sectors.
We as a management team to continue to support, believe in, and align with the company and its investors. I'll now hand over for the Q&A session.
That's great, Jeff. Thank you very much indeed for your presentation, and I'll bring up everybody's cameras. That's happening now. Thank you very much indeed. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated on the right-hand corner of your screen. Just while the company take a few moments to review those questions submitted already, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your Investor Meet Company dashboard. Jeff, as you can see, you've had a number of questions from investors throughout today's call. Thank you to everybody for your engagement this afternoon.
Maybe if I may, Jeff, hand back to you if you could perhaps read out the questions and distribute them as appropriate, and I'll pick up from you at the end.
Okay. Well, we'll start with the results of the poll because they're interesting. Are you a shareholder of Avation PLC? Well, 54% of you are. Should Avation's credit rating increase now that we've shown that we've survived COVID? 87% of you think we should. That's great. The interesting question is, how much more would you pay to be CO2 if you spent $500 on an air ticket? 65% of you say zero, 28% of you say $100, and 7% of you say $500. The bad news is, at today's prices, the real number's more likely to be $1,000. That's why it's important that we have low CO2 engines.
I said, you know, if only four of you, 4% of you will pay. Sorry, 7% of you will pay $500, it's not a very good result. The Q&A. We've got lots of questions. Jake, pre-submitted question. Historically, Avation has been approached in the past the sale of substantial portions of the fleet, and indeed, prior to COVID, Avation was reviewing a strategic review after being approached by a bona fide offeror. Given the substantial discount to NAV, has Avation received any expressions of interest in the company with a substantial part of its fleet taken in recent months, or is the general appetite for M&A subdued? The company receives inbound inquiries from various investors of various qualities every couple of weeks. They're not generally well formed. And we...
You know, that's why we have brokers and advisors. You know, those people come into our brokers and they deal with them and in the normal way. I don't see a lot of M&A activity in this sector, given that COVID's only just finished and people are sort of still working out what's going on, and there's a lot of volatility in the financing markets. The second question, would Jeff Chatfield or would I look forward to creating a new aircraft leasing company from scratch again or seek to have a secondary role within an enlarged group? My answer is, Avation is doing super well now. It's super well-positioned, so we don't need anything else. Question from Brandon: After COVID, I believe you converted one or two receivables from lessees into effectively term loans.
In relation to these, could you detail how much of this currently stands at when the repayments commence, the period over which these will be paid, and the monthly installments? That's a question for Iain.
Hi, Brandon. So the amount at third of June outstanding on that loan is $21 million. Repayments will start in January 2023 and continue over the 24 months until December 2024.
Excellent. Phil asks, what is the company's ability to monetize PAL shares, and what is the expected value? Iain.
Yeah. I mean, there's no restrictions on us selling those PAL shares if we can find a market for them. The valuation-
They convert to listed shares.
I think at some point.
At some point.
At the moment they're still unlisted. I mean, our valuation is based on the listed holding company. And we value the shares between [audio distortion] .
The next question was: Given the current NAV and dollar rate on the share price, do you have thoughts to launch a substantial buyback, or would there be a better use of spare cash? Well, ultimately, the company's got to manage all parts of capital structure, so bonds, shares, and bank debt. Clearly the expensive money at the moment are the bonds. It’s gotta be able to grow and survive. It’s a juggling match with several balls. The shares are part of it, the bonds are part of it, and growth is a part of it. You clearly need to fuel all of those activities. Ken B. asks, what level of inflation rate are you seeing on new ATR 72-600 ATR aircraft?
How is this reflected in existing fleet valuations over and above the normalizing of asset revaluation? This is a question. Iain.
Yeah. I mean, we've obviously seen inflation jump in the last year, so we've increased our inflation estimate, which we use for our residual values, which forms part of our lease encumbered valuation of the aircraft fleet. So we've basically increased the near-term, you know, inflation factors to match current rates of inflation. Then that trims back down to a sort of long-term 2% inflation factor.
Well, we're. Hang on. We're way under. If you read the newspaper, the inflation rates are three times what our inflation rate
Yeah. I mean, we did this exercise before third of June, and I think what everybody's seen is that inflation has continued to increase since 3rd of June, so.
Yeah. We used published, the published numbers back in about May.
Yeah.
Clearly, obviously, the published numbers now could be double or triple that. Next one, Keith B: Aircraft sales, two ATR 72s with completion in October 2022, not 2023 as on slide. We have two available for sale and lease at the moment, correct, in 2022. There might be an error on the slide.
No, it's not. It's just two are in the process of being completed, and the last two Virgin aircraft are. We're still trying to sell.
Yeah, that's in 2022.
Help us out of the two that are currently for sale.
Yeah. There is an error in slide nine that he's referring to, which is the second bullet point. Two ATR 72-600 have been returned and sold with completion expected October 2023. That should be October 2022.
Jonathan Figg: Is there any reason why all the debt is not hedged for these? 90-odd% of the debt's hedged. Jon, the only bits that are not hedged are in the warehouse, which is what a warehouse does.
There's two components to unhedged debt. There's the warehouse loan, which is about 8% of our debt. We also have two aircraft which are on floating rate leases, so we've kept the debt at floating rate because there's a natural hedge there, although we don't call it hedged in the reporting.
Next question from Andy G: Which aircraft are currently unutilized, and what are their plans to re-lease or sell? Do these four aircraft represent the $130 million assets held for sale? Rod, what have we got to place?
We currently have 737 which still needs to be placed. We have two ATRs, the last two of the Virgin ATRs which we're still trying to place or sell.
The Myanmar.
The Myanmar one, although there's that contract, we have a commitment.
Active Touch: Held for sale as of 30 June, there was a number of aircraft, and you've seen a number of aircraft transactions occur and occurring. Phil H: What was the size of the bond repurchase and what was the price, Iain?
We repurchased $4.4 million face value of notes at $0.75.
Brian C: Generally speaking, in the current market, where do you expect to utilize the proceeds from asset sales? Investment, new aircraft or more debt pay down? Well, if you look at our current liabilities are relatively low and, but we do have a growth, a small growth pipeline, and we do have to pay our bond coupons, and we do need to continue in our business. There's not a sort of a, you know, we need to continue as normal. Right. Pete B: Could you explain how low carbon emissions fuels are manufactured? Well, the thing is that fossil fuels are obviously pulled out of the ground, processed and distributed, whereas sustainable aviation fuels are manufactured products mainly from sustainable inputs.
The advantage from a number of perspectives is it's a manufactured product, so people have offtake agreements and they're not exposed to the you know the oil price changing every day. But at the moment, you know, the manufacturing is quite energy intensive and it's much more expensive than normal fuel. So clearly, in the coming days, fuel efficiency is very, very important and new technology is very, very important. Aircraft engines will need to be changed to be able to support it. But fortunately, ATR's engines can and will be certified to support it in the very near term. But other types will take a bit of time. Probably by the end of the decade, all aircraft types will be able to use it. Phil H: Why did assets held for sale jump so much?
Well, because we've sold and transitioned lots of planes. We had how many did we have to transition? 21 something.
Last year the number was based on 3 ATRs, which were sold in the last year. This year the number is based on 2 A321s and 2 ATRs which are currently available for sale.
The next one is: Can you expand more on the situation with customers less compIaint with payment terms? Iain.
Yeah. I mean, you know, there's been a number of customers.
Small number.
Who are in arrears. I mean, I think the position has improved compared to last year. I mean, if you look at you know some of our major customers, I mean, we spoke earlier about the conversion of some of those arrears into an interest-bearing loan. Yeah, I mean, we regularly follow up with customers over arrears and then sometimes take steps to recover those arrears. There's a couple of claims out at the moment.
The next one is from Moysten G: Should we expect higher pay downs secured debt in FY 2023? Probably not more than normal 'cause it follows amortization.
Unless you're selling the aircraft.
Unless you're trading the aircraft, but there's only a few we're trading. Should we expect further mature bond buybacks? No comment on that. There's probably not. From a modeling perspective, any guidance on revenues and EBITDA for 2023? No, not at the moment. How much should we expect exactly in asset sale processes? We don't know the answers to that. James is asking: It was going great pre-COVID-19. How are we doing now compared to pre-COVID-19? Well, we're recovering from COVID-19. Clearly, there's plenty of opportunity now because the manufacturers haven't manufactured that many aircraft during COVID-19. The airlines are recovering. five or six or 7% of all the world's aircraft are sort of lost forever into Russia. And interest rates higher mean that airlines actually need leasing companies.
In theory, we're going into a fantastic time for aircraft leasing companies because what we provide is in demand. Quite interestingly, with the technology change of low CO2, it means you can do it all again. You know, you've got to. There's a lot of aircraft that'll need to be replaced. The whole aircraft leasing industry is gonna be sitting there thinking, "We have a lot of work to do and a lot of opportunity, and there'll be a lot of growth." We're not there yet, but clearly, it's a very opportunistic time. Ken B: Is there an opportunity to revisit spare engine support with a new engine type?
Could it become a tool to attract and support more customers? The answer to that is probably not, because airlines want aircraft, and they often have their own arrangements around engines. Like, there are people that have tried to set up pure leasing engine leasing businesses, and they don't seem to have the scale that they could. Phil O, "Should legal professional fees come down or will it remain at recent levels?" Well, Duncan's on the line, so why don't you answer that one?
Thanks, Jeff. Well, during COVID, we did legal transactions with almost every lessee and almost every bank, often more than once. During the period, our external counsel fees were much higher than we would normally expect. I mean, normally our fees are a proportion of new transactions that we do, but they've been extremely high during the COVID period, and we do expect them to come down significantly in the future.
JC says, "With the expected influence from rents, what is the minimum cash you need to hold? What are your priorities for excess cash?" We have no excess cash. We like to hold over $100 million. I think the minimum would be $100 million. Next slide. Brandon B, "Is there revised broker notes?" Yes, there are two or three. Arden have one, Davy have one, and WH Ireland have one. Charles C, "Avation's [audio distortion] ?
Would be minus.
Would be minus now. It would be an upgrade.
Yes.
If you had issued debt today, what yield would have been required, and how does it compare to your asset?" Well, I think the market's pretty tough for anyone at the moment. It's a struggle on that one. Are there any more questions?
Jeff, you've been very kind, and you've read through every single question that has come through from investors. If there are any other that we've missed or whatever, obviously we'll make those available post today's call. Jeff, thank you, and to the team for updating investors this afternoon. I know investor feedback will be important to you all. I'll shortly redirect those on the call to give you their feedback. Jeff, before doing so, I wonder if I may just ask you for a few closing comments.
Look, thank you so much for your support. I mean, clearly it's been a torrid time, and there's still a lot of risk in the industry. You know, there's wars, there's pandemics, and there's technology change around the CO2 stuff. Clearly there are plenty of risks. At the moment it does seem to be that the fundamentals which are passenger demand is demonstrably there. You know, people wanna travel, airlines are recovering, and the ones that you know survived will do well and therefore will do well. Thanks for your time, and please feel free to contact us with questions at any time, and we remain available. Thanks very much.
That's great. Jeff, thank you very much indeed. Could I please ask investors on this call not to close this session, as we'll now automatically redirect you for the opportunity to provide your feedback and all the management team can better understand your views and expectations. This may take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of Avation PLC, we'd like to thank you for attending today's presentation. May I wish you all a very pleasant afternoon. Thank you.