Avation PLC (LSE:AVAP) has published unaudited results for the financial year ended 30 June 2026 showing a return to profit before tax after a loss in the prior year. The question for readers is how a lessor whose revenue was flat managed that swing, and what the figures say about the balance sheet it is carrying into a period complicated by a customer bankruptcy filing.

A regional aircraft lessor with an ATR focus

Avation is a commercial passenger aircraft leasing company whose shares trade on the London Stock Exchange under the code AVAP. It buys aircraft and leases them to airlines, earning rent over multi-year contracts. The company reported a fleet of 33 aircraft at the year end, the same number as a year earlier, and its order book is weighted towards the ATR 72-600 turboprop used on regional routes. It reported 15 firm ATR 72-600 orders after converting five purchase rights, with rights over a further 19 aircraft.

What the 30 September results showed

On 30 September 2026, Avation reported revenue of US$110.1 million, unchanged from the previous year. Operating profit rose to US$64.3 million from US$46.4 million, and the group recorded profit before tax of US$10.0 million against a loss of US$9.7 million in the year to June 2025. Net profit was US$8.4 million and basic earnings per share were 13.36 US cents. The executive chairman described the year as "a significant year of progress for Avation".

In a separate announcement the same day, the company declared an interim dividend of 1.5 US cents per share for the year, up from 1.0 cent in the prior year. The shares are due to go ex-dividend on 22 October 2026, with payment scheduled for 10 November 2026.

Balance sheet and cash flow

The results show a smaller and less leveraged group. Fleet assets fell to US$746.9 million from US$819.8 million, and total assets declined to about US$1.0 billion. Net indebtedness was reported at US$523.7 million, down from US$604.2 million, taking the ratio of net debt to total assets to 52.3% from 54.8%. Cash rose to US$52.4 million. The company said ten aircraft were unencumbered, compared with six a year earlier, which suggests the group has more flexibility over financing.

Net asset value per share was reported at US$4.39, or £3.33, up from US$3.66. Avation also spent US$15.2 million buying back shares during the year. On credit ratings, the company said S&P Global upgraded it to 'B' from 'B-', while Moody's and Fitch affirmed their ratings with stable outlooks.

Not every measure improved. Operating cash flow dropped to US$30.8 million from US$91.5 million, the reported lease yield eased to 10.7% from 11.3%, and the weighted average remaining lease term slipped to 3.8 years.

Risks and points to watch

The most immediate uncertainty is airBaltic. The company noted that, after the year end, airBaltic began Chapter 11 proceedings; Avation leases four aircraft to the airline and said some or all may stay with it or be moved to other customers in due course. The outcome of those proceedings, and any re-leasing costs, remain open questions for the company and lenders. Other factors include the timing of further ATR deliveries, such as aircraft for Finnair under a six-year lease signed in July 2026, interest costs on a still substantial debt load, and the fact that these results are unaudited. Management said it may consider bond repurchases where appropriate.

Conclusion

Avation's swing to a pre-tax profit came without revenue growth: the reported figures point instead to a higher operating profit, lower net debt and a larger asset base per share. Weaker operating cash flow, a shorter lease term and the airBaltic restructuring mean the coming year's performance will depend on how successfully the fleet stays placed with paying airline customers.