Air Partner flies COVID-19 relief charters to 173% profit gain

By Doug Gollan, February 22, 2021

Analyst Canaccord Genuity restores “buy” recommendation for Air Partner

Air Partner said it is announcing today an update to shareholders, including details of its dividend policy. The move reaffirms its previously reported update from January. That called for a profit before tax of no less than £11.5 million for the year ended 31 January 2021. That compares to £4.2 million from the previous year, a 173% gain.

Having announced the reinstatement of dividends at the interim results in September with a payment of 0.8 pence per share, it now intends to announce a final dividend of 1.6 pence per share at the time of the full-year results, subject to audit. This makes a total of 2.4 pence per share for the year as a whole.

Beyond the pandemic, the board will target dividend cover of 3.0 to 3.5 times earnings in a normal year after adding back non-cash-related exceptional items such as amortization of acquired intangibles.

COVID freight and group charters power Air Partner profits

In a written statement, Air Partner said, “exceptional levels” of COVID-19 related activity in the first half of the year for group and freight charters helped power the performance. Performance in other segments, including jet cards and private jet charters, varied, impacted by government restrictions and airport closures globally. However, the company said the U.S. was “the standout performer.”

Air Partner’s JetCard starts at just 10 hours and is refundable. It offers fixed one-way pricing and a non-peak booking window of up to 24 hours before departure.

Air Partner also pointed to cost-cutting initiatives. It completed a share placing, raising gross proceeds of £7.5m. Demand for evacuations and PPE flying significantly decreased in the second half of the year. However, there was a recovery in Safety & Security and a rise of inquiries in its Private Jets division, particularly in the U.S.

At the end of its financial year, Air Partner said it has no debt. Cash in the bank was £9.9 million. Excluding significant customer deposits and JetCard cash, normalized cash was £8.3 million. The Group has access to a total debt facility of £14.5 million. It includes a £1.5 million overdraft and a £13. million revolving credit facility, which remains undrawn. The RCF is due to expire in February 2023.

2021 Air Partner outlook

Air Partner said it has “made a profitable start to the year.” Results, however, are “lower than the exceptional earlier months we experienced in our last financial year as a result of pandemic-related activity.”

It said the U.S. business remains buoyant across all product lines and performance. Private jet charters and jet card sales in the UK and Europe remain impacted by travel restrictions and quarantine measures. There are signs of recovery in its Security group as airports expect passenger numbers to climb over the summer.

Air Partner’s current base-case expectation for FY22 is to deliver profits in line with the just-completed year.

“The global charter business has consistently been a volatile industry, with low visibility, and we are seeing that now more than ever. However, we have a strong balance sheet and are well placed to benefit from the eventual re-opening of the travel industry across both our Charter and Safety & Security divisions. We have a strong portfolio of global aviation services, with diverse exposure to sectors and geographies, and we expect to continue to see a growing contribution from markets outside the UK and Europe, particularly the U.S.,” the statement noted.

Air Partner stock price

Analyst Gert Zonneveld of Canaccord Genuity said, “The Group remains well placed to benefit from the long-term growth trends in aviation. Its Charter and Safety & Security divisions will likely perform well as the group emerges from the pandemic and, supported by a strong balance sheet, it will likely continue to diversify its revenue streams and aviation services portfolio in the coming years and increase its revenue visibility. We reinstate our buy recommendation with a price target of 100p.”

It said it expects FY 22 profits to fallback to FY 2020 levels. Zonneveld wrote, “We forecast a PBT of £4.2m for FY22, despite the fact that the PJ and S&S divisions continue to be severely impacted by travel restrictions. Our maiden PBT forecast for FY23 is £6.5m; this reflects a gradual recovery for PJs and S&S but a cautious stance regarding the Group Charter business, which might take longer to recover. Our EPS forecasts for FY21, FY22, and FY23 are 13.2p, 4.6p, and 7.1p.”

Editor’s Note: An earlier version had the incorrect percentage for Air Partner’s growth in profits.

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