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Air Lease Corporation Announces Second Quarter 2022 Results

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LOS ANGELES, August 04, 2022--(BUSINESS WIRE)--Air Lease Corporation (ALC) (NYSE: AL) announces financial results for the three and six months ended June 30, 2022.

"We had a good second quarter with higher than expected aircraft deliveries and strong aircraft placements. Aircraft shortages and concerns about future new aircraft delivery delays are causing many airlines to secure lease extensions on existing aircraft, as pandemic recovery is well underway with airlines struggling to meet significant passenger demand," said John L. Plueger, Chief Executive Officer and President.

"Passenger traffic growth remains on a very strong recovery trajectory, with international volume gaining meaningful momentum so far in 2022 – accordingly, lease placements from our orderbook are stretching further out into the future. Lease rates are strengthening, reflective of diminishing aircraft supply, increasing interest rates, and higher aircraft values," said Steven F. Udvar-Házy, Executive Chairman of the Board.

Second Quarter 2022 Results

The following table summarizes our operating results for the three and six months ended June 30, 2022 and 2021 (in millions, except per share amounts and percentages):

Operating Results

Three Months Ended

June 30,

Six Months Ended

June 30,

2022

2021

$ change

% change

2022

2021

$ change

% change

Revenues

$

557.7

$

491.9

$

65.8

13.4

%

$

1,154.4

$

966.7

$

187.7

19.4

%

Operating expenses

(412.8

)

(377.3

)

(35.5

)

9.4

%

(808.8

)

(748.6

)

(60.2

)

8.0

%

Write-off of Russian fleet

%

(802.4

)

(802.4

)

100.0

%

Income/(loss) before taxes

144.9

114.6

30.3

26.4

%

(456.8

)

218.1

(674.9

)

(309.4

)%

Net income/(loss) attributable to common stockholders

$

105.9

$

85.6

$

20.3

23.7

%

$

(373.6

)

$

165.8

$

(539.4

)

(325.3

)%

Diluted earnings/(loss) per share

$

0.95

$

0.75

$

0.20

26.7

%

$

(3.32

)

$

1.45

$

(4.77

)

(329.0

)%

Adjusted net income before income taxes(1)

$

154.5

$

125.9

$

28.6

22.7

%

$

355.4

$

243.1

$

112.3

46.2

%

Adjusted diluted earnings per share before income taxes(1)

$

1.39

$

1.10

$

0.29

26.4

%

$

3.15

$

2.13

$

1.02

47.9

%

Key Financial Ratios

Three Months Ended

June 30,

Six Months Ended

June 30,

2022

2021

2022

2021

Pre-tax margin

26.0%

23.3%

(39.6)%

22.6%

Pre-tax return on common equity (trailing twelve months)

(3.0)%

8.5%

(3.0)%

8.5%

Adjusted pre-tax margin(1)

27.7%

25.6%

30.8%

25.1%

Adjusted pre-tax return on common equity (trailing twelve months)(1)

12.2%

9.6%

12.2%

9.6%

(1)

Adjusted net income before income taxes, adjusted diluted earnings per share before income taxes, adjusted pre-tax margin and adjusted pre-tax return on common equity have been adjusted to exclude the effects of certain non-cash items, one-time or non-recurring items, such as write-offs of our Russian fleet, that are not expected to continue in the future and certain other items. See note 1 under the Consolidated Statements of Operations included in this earnings release for a discussion of the non-GAAP measures and a reconciliation to their most comparable GAAP financial measures.

Highlights

  • Took delivery of 21 aircraft from our new order pipeline and one new incremental aircraft, representing approximately $1.4 billion in aircraft investments.

  • As of June 30, 2022, we had 392 aircraft in our owned fleet, with a net book value of $23.5 billion, a weighted average age of 4.4 years and a weighted average lease term remaining of 7.1 years.

  • Placed 99% of our contracted orderbook positions on long-term leases for aircraft delivering through the end of 2023 and have placed 58% of our entire orderbook.

  • Ended the quarter with $31.3 billion in committed minimum future rental payments consisting of $15.0 billion in contracted minimum rental payments on the aircraft in our existing fleet and $16.3 billion in minimum future rental payments related to aircraft on order.

  • On August 3, 2022, our board of directors declared a quarterly cash dividend of $0.185 per share on our outstanding common stock. The dividend will be paid on October 7, 2022 to holders of record of our common stock as of September 12, 2022.

Financial Overview

Our total revenues for the three months ended June 30, 2022 increased by 13.4% to $557.7 million as compared to the three months ended June 30, 2021. The increase in total revenues was primarily driven by the continued growth in our fleet and the recognition of cash basis revenue of $8.7 million as compared to $41.6 million of cash basis losses in the three months ended June 30, 2021. This increase was partially offset by the loss of rental revenue from the termination of our leasing activities in Russia during the first quarter of 2022 and lower aircraft sales, trading and other revenue. Lower aircraft sales, trading and other revenue was driven by $34.0 million in revenue recognized in the prior year related to the sale to a third party of certain unsecured claims related to Aeromexico’s insolvency proceedings. Our net income attributable to common stockholders for the three months ended June 30, 2022 was $105.9 million, or $0.95 per diluted share compared to $85.6 million, or $0.75 per diluted share, for the three months ended June 30, 2021. We recorded adjusted net income before income taxes during the three months ended June 30, 2022 of $154.5 million or $1.39 per adjusted diluted share, an increase of approximately 22.7% and 26.4% as compared to $125.9 million or $1.10 per adjusted diluted share for the three months ended June 30, 2021, respectively. The increase in net income attributable to common stockholders and adjusted net income before income taxes was primarily driven by the increase in revenues as discussed above.

Flight Equipment Portfolio

As of June 30, 2022 the net book value of our fleet increased to $23.5 billion, compared to $22.9 billion as of December 31, 2021. As of June 30, 2022, we owned 392 aircraft in our aircraft portfolio, comprised of 287 narrowbody aircraft and 105 widebody aircraft, and we managed 89 aircraft. The weighted average fleet age and weighted average remaining lease term of our fleet as of June 30, 2022 was 4.4 years and 7.1 years, respectively. We have a globally diversified customer base of 116 airlines in 62 countries.

The following table summarizes the key portfolio metrics of our fleet as of June 30, 2022 and December 31, 2021:

June 30, 2022

December 31, 2021

Net book value of flight equipment subject to operating lease

$

23.5 billion

$

22.9 billion

Weighted-average fleet age(1)

4.4 years

4.4 years

Weighted-average remaining lease term(1)

7.1 years

7.2 years

Owned fleet

392

382

Managed fleet

89

92

Aircraft on order

430

431

Total

911

905

Current fleet contracted rentals

$

15.0 billion

$

14.8 billion

Committed fleet rentals

$

16.3 billion

$

16.1 billion

Total committed rentals

$

31.3 billion

$

30.9 billion

(1)

Weighted-average fleet age and remaining lease term calculated based on net book value of our flight equipment subject to operating lease.

The following table details the regional concentration of our flight equipment subject to operating leases:

June 30, 2022

December 31, 2021

Region

% of Net Book Value

% of Net Book Value

Europe

31.3%

32.5%

Asia (excluding China)

28.2%

26.0%

China

12.2%

12.8%

The Middle East and Africa

10.1%

10.7%

Central America, South America, and Mexico

7.3%

6.8%

U.S. and Canada

7.1%

7.2%

Pacific, Australia, and New Zealand

3.8%

4.0%

Total

100.0%

100.0%

The following table details the composition of our flight equipment subject to operating leases by aircraft type:

June 30, 2022

December 31, 2021

Aircraft type

Number of

Aircraft

% of Total

Number of

Aircraft

% of Total

Airbus A319-100

1

0.3%

1

0.3%

Airbus A320-200

28

7.1%

31

8.1%

Airbus A320-200neo

26

6.6%

23

6.0%

Airbus A321-200

24

6.1%

26

6.8%

Airbus A321-200neo

70

17.9%

69

18.1%

Airbus A330-200

13

3.3%

13

3.4%

Airbus A330-300

5

1.3%

8

2.1%

Airbus A330-900neo

11

2.8%

9

2.4%

Airbus A350-900

13

3.3%

12

3.1%

Airbus A350-1000

6

1.5%

5

1.3%

Boeing 737-700

4

1.0%

4

1.0%

Boeing 737-800

84

21.4%

88

23.0%

Boeing 737-8 MAX

39

9.9%

28

7.3%

Boeing 737-9 MAX

10

2.7%

7

1.8%

Boeing 777-200ER

1

0.3%

1

0.3%

Boeing 777-300ER

24

6.1%

24

6.3%

Boeing 787-9

26

6.6%

26

6.8%

Boeing 787-10

6

1.5%

6

1.6%

Embraer E190

1

0.3%

1

0.3%

Total (1)

392

100.0%

382

100.0%

(1)

As of June 30, 2022, we had six aircraft classified as flight equipment held for sale. As of December 31, 2021, we did not have any flight equipment classified as held for sale.

Debt Financing Activities

We ended the second quarter of 2022 with total debt financing, net of discounts and issuance costs, of $18.3 billion. As of June 30, 2022, 92.4% of our total debt financing was at a fixed rate and 99.3% was unsecured. As of June 30, 2022, our composite cost of funds was 2.81%. We ended the second quarter with total liquidity of $7.6 billion.

As of the end of the periods presented, our debt portfolio was comprised of the following components (dollars in millions):

June 30, 2022

December 31, 2021

Unsecured

Senior notes

$

17,686

$

16,892

Revolving credit facility

520

Term financings

190

167

Total unsecured debt financing

18,396

17,059

Secured

Term financings

120

127

Export credit financing

15

18

Total secured debt financing

135

145

Total debt financing

18,531

17,204

Less: Debt discounts and issuance costs

(195

)

(182

)

Debt financing, net of discounts and issuance costs

$

18,336

$

17,022

Selected interest rates and ratios:

Composite interest rate(1)

2.81

%

2.79

%

Composite interest rate on fixed-rate debt(1)

2.85

%

2.90

%

Percentage of total debt at a fixed-rate

92.4

%

94.8

%

(1)

This rate does not include the effect of upfront fees, facility fees, undrawn fees or amortization of debt discounts and issuance costs.

Conference Call

In connection with this earnings release, Air Lease Corporation will host a conference call on August 4, 2022 at 4:30 PM Eastern Time to discuss the Company's financial results for the second quarter of 2022.

Investors can participate in the conference call by dialing 1 (833) 634-2156 domestic or 1 (412) 902-4142 international. Please request to be joined into the Air Lease Corporation call.

The conference call will also be broadcast live through a link on the Investor Relations page of the Air Lease Corporation website at www.airleasecorp.com. Please visit the website at least 15 minutes prior to the call to register, download and install any necessary audio software. A replay of the broadcast will be available on the Investor Relations page of the Air Lease Corporation website.

For your convenience, the conference call can be replayed in its entirety beginning at 7:30 PM ET on August 4, 2022 until 7:30 PM ET on August 11, 2022. If you wish to listen to the replay of this conference call, please dial 1 (877) 344-7529 domestic or 1 (412) 317-0088 international and enter passcode 3322431.

About Air Lease Corporation (NYSE: AL)

Air Lease Corporation is a leading aircraft leasing company based in Los Angeles, California that has airline customers throughout the world. Air Lease Corporation and its team of dedicated and experienced professionals are principally engaged in purchasing commercial aircraft and leasing them to its airline customers worldwide through customized aircraft leasing and financing solutions. Air Lease Corporation routinely posts information that may be important to investors in the "Investors" section of Air Lease Corporation's website at www.airleasecorp.com. Investors and potential investors are encouraged to consult the Air Lease Corporation website regularly for important information about Air Lease Corporation. The information contained on, or that may be accessed through, Air Lease Corporation's website is not incorporated by reference into, and is not a part of, this press release.

Forward-Looking Statements

This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those statements appear in a number of places in this press release and include statements regarding, among other matters, the state of the airline industry, including the impact of Russia’s invasion of Ukraine and the impact of sanctions imposed on Russia, our access to the capital markets, the impact of lease deferrals and other accommodations, aircraft delivery delays and other factors affecting our financial condition or results of operations. Words such as "can," "could," "may," "predicts," "potential," "will," "projects," "continuing," "ongoing," "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and "should," and variations of these words and similar expressions, are used in many cases to identify these forward-looking statements. Any such forward-looking statements are not guarantees of future performance and involve risks, uncertainties, and other factors that may cause our actual results, performance or achievements, or industry results to vary materially from our future results, performance or achievements, or those of our industry, expressed or implied in such forward-looking statements. Such factors include, among others:

  • our inability to obtain additional capital on favorable terms, or at all, to acquire aircraft, service our debt obligations and refinance maturing debt obligations;

  • increases in our cost of borrowing or changes in interest rates;

  • our inability to generate sufficient returns on our aircraft investments through strategic acquisition and profitable leasing;

  • the failure of an aircraft or engine manufacturers to meet its delivery obligations to us, including or as a result of technical or other difficulties with aircraft before or after delivery;

  • the extent to which the Russian invasion of Ukraine and the impact of sanctions imposed by the United States, European Union, United Kingdom and others affect our business, including our efforts to pursue insurance claims to recover losses related to aircraft that remain in Russia, the exclusion of Russia, Ukraine and Belarus from the insurance policies that we separately purchase for our owned fleet, and the ability of our lessees to comply with their obligations to maintain insurance policies that cover their operations;

  • the extent to which the COVID-19 pandemic impacts our business;

  • obsolescence of, or changes in overall demand for, our aircraft;

  • changes in the value of, and lease rates for, our aircraft, including as a result of aircraft oversupply, manufacturer production levels, our lessees’ failure to maintain our aircraft, rising inflation, appreciation of the U.S. Dollar, and other factors outside of our control;

  • impaired financial condition and liquidity of our lessees, including due to lessee defaults and reorganizations, bankruptcies or similar proceedings;

  • increased competition from other aircraft lessors;

  • the failure by our lessees to adequately insure our aircraft or fulfill their contractual indemnity obligations to us;

  • increased tariffs and other restrictions on trade;

  • changes in the regulatory environment, including changes in tax laws and environmental regulations;

  • other events affecting our business or the business of our lessees and aircraft manufacturers or their suppliers that are beyond our or their control, such as the threat or realization of epidemic diseases, natural disasters, terrorist attacks, war or armed hostilities between countries or non-state actors; and

  • any additional factors discussed under "Part I — Item 1A. Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2021, "Part II — Item 1A. Risk Factors," in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 and other SEC filings, including future SEC filings.

All forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations. You are therefore cautioned not to place undue reliance on such statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not intend and undertake no obligation to update any forward-looking information to reflect actual results or events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

Air Lease Corporation and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and par value amounts)

June 30, 2022

December 31, 2021

(unaudited)

Assets

Cash and cash equivalents

$

1,012,779

$

1,086,500

Restricted cash

21,069

21,792

Flight equipment subject to operating leases

27,969,301

27,101,808

Less accumulated depreciation

(4,501,559

)

(4,202,804

)

23,467,742

22,899,004

Deposits on flight equipment purchases

1,618,687

1,508,892

Other assets

1,526,180

1,452,534

Total assets

$

27,646,457

$

26,968,722

Liabilities and Shareholders’ Equity

Accrued interest and other payables

$

628,526

$

611,757

Debt financing, net of discounts and issuance costs

18,336,075

17,022,480

Security deposits and maintenance reserves on flight equipment leases

1,186,442

1,173,831

Rentals received in advance

147,127

138,816

Deferred tax liability

908,653

1,013,270

Total liabilities

$

21,206,823

$

19,960,154

Shareholders’ Equity

Preferred Stock, $0.01 par value; 50,000,000 shares authorized; 10,600,000 (aggregate liquidation preference of $850,000) shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

$

106

$

106

Class A common stock, $0.01 par value; 500,000,000 shares authorized; 110,892,097 and 113,987,154 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

1,109

1,140

Class B Non-Voting common stock, $0.01 par value; authorized 10,000,000 shares; no shares issued or outstanding

Paid-in capital

3,244,282

3,399,245

Retained earnings

3,194,672

3,609,885

Accumulated other comprehensive loss

(535

)

(1,808

)

Total shareholders’ equity

$

6,439,634

$

7,008,568

Total liabilities and shareholders’ equity

$

27,646,457

$

26,968,722

Air Lease Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share, per share amounts and percentages)

Three Months Ended

June 30,

Six Months Ended

June 30,

2022

2021

2022

2021

(unaudited)

Revenues

Rental of flight equipment

$

545,271

$

452,044

$

1,111,825

$

920,139

Aircraft sales, trading and other

12,425

39,833

42,533

46,565

Total revenues

557,696

491,877

1,154,358

966,704

Expenses

Interest

118,997

113,598

236,274

231,584

Amortization of debt discounts and issuance costs

13,413

12,513

26,610

24,538

Interest expense

132,410

126,111

262,884

256,122

Depreciation of flight equipment

235,284

217,817