Nordic Aviation Capital: Continued progress and focus on growth

Nordic Aviation Capital’s profit from ordinary operating activities was up 23% from USD 102.2 million to USD 125.6 million in 2011/12. The operating profit, including aircraft value adjustments, was up 9% from USD 86.9 million to USD 95 million. The results are described by the company’s founder and Chairman of the Board of Directors, Martin Møller, as satisfactory and on target.

Nordic Aviation Capital A/S is performing well in an industry which is under pressure.

In the annual report for 2011/12, which has just been released, revenue of USD 279 million is posted, up 42% relative to revenue of USD 195.8 million in 2010/11. The revenue includes the gross value of aircraft sold (USD 87 million in 2011/12 against USD 44 million in 2010/11).

The satisfactory figures are attributable partly to the company’s solid liquidity, which is steadily increasing and provides a rare freedom to act quickly and with flexibility in the market. Cash resources are up USD 13 million at USD 71.9 million. The company has also just signed its largest contract ever with Indonesian carrier, Garuda.

Our liquidity comes from several sources. Firstly, we reinvest all earnings in the company, and secondly we endeavour to obtain 100% financing for investments in new assets, which we are able to do because the company is well consolidated and has a positive cash flow and substantial cash reserves. Our strategy of maintaining a certain level of cash reserves has been and continues to be an important part of our success,” says Martin Møller, in a comment on the annual report.

Largest contract ever
At the end of the financial year, NAC had a fleet of 171 planes – 24 more than the previous year. The fleet is expected to grow to more than 200 planes in the current financial year, cementing the company’s position as the world’s largest regional lessor of turboprop aeroplanes. The company’s primary focus is on this type of aircraft, where the market is in the process of changing to larger planes, i.e. to 70-seater planes from the earlier 40 to 50-seater planes.

“This development is exciting. In June 2012, we signed the company’s largest contract ever with Indonesian carrier Garuda, for the delivery of 12 new Bombardier CRJ 1000 aircraft – an investment with a retail value of almost USD 600 million. We will commence delivery of these aircraft in December. NAC’s sales pipeline currently includes contracts valued at USD 1 billion, ensuring continued growth for the company in the next 2-3 years,” says Martin Møller.

NAC currently has approx. 80 employees, with 50 working in Billund, Denmark and approx. 25 in regional sales offices in Singapore, Ireland and North America. The company expects to hire a further approx. 20-24 employees during the next 12 months.

A future with a strong focus on growth
NAC’s immediate future will be busy, with many aircraft to be delivered on contracts signed during the past 6-12 months. Also, the company is focusing strongly on ensuring future growth, both in Denmark and in the three regional sales offices.

Continued focus will be on turboprop aircraft, with greater attention being given to Asia and South America, where growth is strong and demand for this type of aircraft is greatest. With high and rising oil prices, they represent a very attractive alternative to regional jets.

“Our aircraft typically service routes which are less sensitive to economic downturns and subject to less competition, making their value more stable. We are continuing the strategy we set several years ago. We are very pleased with current developments and the outlook for the future,” says Martin Møller.