“Very weak” private jet charters expected to see “some improvement” in the second quarter

U.K.-based Air Partner offered its third COVID-19 Coronavirus update this morning with news of a £6m profit before tax covering February, March, and April, its fiscal first quarter.

On the news, its stock (LON: AIR) was trading at GBX 49.40 midday in London, down from its 52-week high GBX 102.90, but up considerably from a low last month of just GBX 15.33.

We anticipate some improvement when international airways start to re-open, as some executives and high net worth individuals seek to travel independently and from less busy airports

– Air Partner

In the update, Air Partner wrote, “The Group has had a strong start to the financial year, with the unaudited accounts for February, March, and April showing an expected underlying profit before tax of £6m.”

The global aviation services group continued, “April was a record month, predominantly driven by unusually high levels of activity in Freight and Group Charter. However, as expected, activity in Private Jets and Safety & Security remains notably lower than in previous years, although Redline has recently secured two new security contract wins.”

Private Jet charters

Still, the future isn’t clear. The update added, “While the forward order book is encouraging as we head into May and June with demand for Freight and Group Charter services remaining high, visibility beyond this is currently limited.”

Air Partner was not immune to the dramatic swoon in more typical private jet charters.

“Activity in Private Jets remains very weak, reflecting wider aviation trends as people follow government advice globally against non-essential travel.”

Like others, it is hoping business aviation gets a boost as restrictions ease and those who can afford to, eschew airlines and airport terminals.

“We anticipate some improvement when international airways start to re-open, as some executives and high net worth individuals seek to travel independently and from less busy airports,” the company said.

Group Charter was buoyed by “significant repatriation and evacuation work related to the COVID-19 pandemic, flying people back to their home countries from around the world.”

In addition, it was involved in flying agricultural workers into the UK from elsewhere in Europe.

There has also been increased demand for corporate shuttles from UK and US customers that value their employees traveling in a more controlled environment, Air Partner said.

Freight charters were driven by emergency shipments of protective personal equipment (PPE) on behalf of a number of customers, and this is set to continue into May.

Despite the drop in demand for its Safety & Security Division services, Redline won a five-year contract with international facilities management company OCS Group UK (OCS) to support Her Majesty’s Courts and Tribunals Service.

Redline will be OCS’s internal quality assurance provider, and will also hold responsibility for the security training of all OCS security officers deployed at every court and tribunal in the UK to ensure they meet Critical National Infrastructure (CNI) standards for security searching and screening.

Redline also won a quality assurance contract with Aéroport Nice Côte d’Azur, which becomes the sixth airport in France to use its quality assurance testing program.

Air Partner financials

At the end of April, the Air Partner said it had normalized cash in the bank of £13m. The amount excluded “significant customer deposits and JetCard cash.”

The Group has access to a total debt facility of £14.5m comprising of a £1.5m overdraft and a £13m revolving credit facility (RCF), which is drawn down by £11.5m as at 1 May 2020. The RCF is due to expire in February 2023.  

Greg Poulton, an analyst with N+1 Singer wrote, “Against a challenging market backdrop, this is an excellent result and is testament to the group’s strategy to diversify its exposure across the aviation chartering industry.”

In addition to on-demand private jet charter, Air Partner offers a guaranteed availability jet card with fixed one-way rates with service areas in North America, Europe, and the Middle East. The company uses ring accounts in Europe to protect jet card deposits. In the U.S. it uses segregated accounts but does not offer an escrow account option.

Editor’s note – Updated to reflect U.S. escrow account policy.

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