Air Partner, the global aviation services group, is providing an update on initial trading in the financial year beginning 1 February 2020. This is the second update to be given during the COVID-19 pandemic and will be followed by shareholder updates approximately every four to six weeks during the crisis:
The Group has had a strong start to the financial year. The unaudited management accounts for February and the flash report for March show that each month generated profits well ahead of both budget and the prior year.
The current indication is that the Group has delivered around £2.4m of underlying profit before tax in the first two months of the year, as new business wins from the crisis, such as repatriation contracts, have outweighed a decline in Safety & Security and European private jet charter during the pandemic.
The Group’s order book for April is encouraging, with the increase in Freight activity witnessed in March continuing. This is driven by the urgent need to move key goods and medical supplies, given the current pressure on supply chains. While it is too early to predict overall activity for the Group in April, these Freight contracts and continued repatriation work demonstrate the value of the Group’s broad spread of aviation activities, offered across multiple markets.
At the end of March, the Group has normalised cash in the bank of £6.5m, excluding 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 April 2020. The RCF is due to expire in February 2023.
As previously announced, Group Charter has carried out significant repatriation and evacuation work during the COVID-19 pandemic. Since our first update of 18 March, we have supported a number of new businesses, including major cruise and oil companies, to repatriate employees and customers, in addition to continuing to work with the UK government to assist British citizens overseas. Further work of this nature is likely to occur in April.
The global private jets industry is operating at reduced levels. This is mirrored in our own customer activity, albeit with the US holding up better, reflecting the size and depth of the market and its customers’ habits. JetCard use has slowed in line with the industry.
The Freight division has seen a pick-up in demand for the movement of goods to keep global supply chains operating during the pandemic and we are well placed to mobilise on this activity at short notice. We have, for example, arranged the transportation of vital medical supplies into the United States and are receiving enquires for further logistical support at this critical time.
Safety & Security
While our long-term contracts in this division remain largely unaffected, as previously reported, training, testing and consulting activities have been significantly impacted by government restrictions on delegate travel, workplace attendance and meetings. This has resulted in associated revenues being delayed. Pleasingly, however, Redline won two new long-term contracts in March and the details of these will be announced shortly.
Cost management and cash conservation
The Board reminds shareholders that the Group owns no aircraft and does not operate as an airline. We continue to tightly manage costs to preserve cash and maintain our working capital. While we have enjoyed a strong start to the financial year, our expectation is that business will now slow as the pandemic continues to restrict aviation activity globally.
Accordingly, we have implemented a series of temporary cost management initiatives and made use of the available government grants and benefits to significantly reduce our cost base for the coming months. These include every director taking a voluntary 20% pay reduction for at least the next two months. The combination of a strong start to the financial year, the swift action on costs and our positive cash balance give the Board confidence that Air Partner is effectively positioned to cope with the challenges and uncertainty posed by the ongoing COVID-19 pandemic.