LOS ANGELES–(BUSINESS WIRE)–Air Lease Corporation (ALC) (NYSE: AL) announces financial results for the three months ended March 31, 2022.

“Industry fundamentals continue to strengthen globally – demand is expanding both for new and young used aircraft, supporting continued firming of lease rates and bolstering the value of the existing aircraft in our fleet. We benefited from this improving backdrop during the first quarter. While we wrote-off our Russia exposure, we are vigorously pursuing our insurance coverage and believe we have strong and valid claims,” said John L. Plueger, Chief Executive Officer and President.

“With the strengthening market, we are monitoring continued delivery delays from Boeing and Airbus very closely, and will adjust accordingly to take advantage of market opportunities – fostering fleet growth in 2022 and beyond. ALC is well-poised to execute successfully on our strategy as the recovery continues. We are also pleased to report that we have fully completed our $150 million common stock repurchase program,” said Steven F. Udvar-Házy, Executive Chairman of the Board.

First Quarter 2022 Results

The following table summarizes our operating results for the three months ended March 31, 2022 and 2021 (in millions, except per share amounts and percentages):

Operating Results

 

Three Months Ended March 31,

 

2022

 

2021

 

$ change

 

% change

Revenues

$

596.7

 

 

$

474.8

 

 

$

121.9

 

 

25.7

%

Operating expenses

 

(396.0

)

 

 

(371.3

)

 

 

(24.7

)

 

6.7

%

Write-off of Russian fleet

 

(802.4

)

 

 

 

 

 

(802.4

)

 

100.0

%

(Loss)/Income before taxes

 

(601.7

)

 

 

103.5

 

 

 

(705.2

)

 

(681.4

)%

Net (loss)/income attributable to common stockholders

$

(479.4

)

 

 $

80.2

 

 

 $

(559.6

)

 

(697.8

)%

Diluted (loss)/earnings per share

$

(4.21

)

 

$

0.70

 

 

$

(4.91

)

 

(701.4

)%

Adjusted net income before income taxes(1)

 $

200.9

 

 

 $

117.1

 

 

 $

83.8

 

 

71.6

%

Adjusted diluted earnings per share before income taxes(1)

$

1.76

 

 

$

1.03

 

 

$

0.73

 

 

70.9

%

Key Financial Ratios

 

Three Months Ended March 31,

 

2022

 

2021

Pre-tax margin

(100.8)%

 

21.8%

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

(3.5)%

 

9.9%

Adjusted pre-tax margin(1)

33.7%

 

24.7%

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

11.8%

 

11.0%

 

(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 Income included in this earnings release for a discussion of the non-GAAP measures and a reconciliation to their most comparable GAAP financial measures.

Highlights

  • For the quarter ended March 31, 2022, we recorded a write-off of our interests in our owned and managed aircraft that remain in Russia, totaling approximately $802.4 million. However, we are vigorously pursuing insurance claims to recover losses relating to these aircraft.
  • Took delivery of eight aircraft from our new order pipeline, and one aircraft from the secondary market, representing approximately $490.0 million in aircraft investments. As of March 31, 2022, we had 370 aircraft in our owned fleet, with a net book value of $22.3 billion, a weighted average age of 4.5 years and a weighted average lease term remaining of 7.0 years.
  • Placed 97% of our contracted orderbook positions on long-term leases for aircraft delivering through the end of 2023 and have placed 52% of our entire orderbook.
  • Ended the quarter with $29.5 billion in committed minimum future rental payments consisting of $14.1 billion in contracted minimum rental payments on the aircraft in our existing fleet and $15.4 billion in minimum future rental payments related to aircraft on order.
  • Issued $1.5 billion in aggregate principal amount of senior unsecured notes comprised of $750 million at a fixed rate of 2.20% due 2027 and $750 million at a fixed rate of 2.875% due 2032.
  • We amended our syndicated unsecured revolving credit facility (the “Revolving Credit Facility”), increasing the total commitments to $7.0 billion across 52 financial institutions as of May 5, 2022 and extending the final maturity by one year to May 5, 2026.
  • As of April 4, 2022, we completed our $150 million stock repurchase program through which we acquired approximately 3.4 million shares of our outstanding Class A common stock.
  • On May 4, 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 July 8, 2022 to holders of record of our common stock as of June 7, 2022.

Financial Overview

Our total revenues for the three months ended March 31, 2022 increased by 25.7% to $596.7 million as compared to the three months ended March 31, 2021. The increase in total revenues was primarily driven by the continued growth in our fleet, significantly lower cash basis and lease restructuring losses, and the recognition of approximately $59.6 million in security deposits and maintenance reserve income resulting from the termination of our leasing activities in Russia as required by government sanctions.

We determined that it is unlikely that we will regain possession of the aircraft that have not been returned and that remain in Russia. As a result, we recorded a write-off of our interests in our owned and managed aircraft that remain in Russia, totaling approximately $802.4 million for the three months ended March 31, 2022. Consequently, we recorded a net loss for the three months ended March 31, 2022, of $479.4 million and $4.21 per diluted share as compared to net income of $80.2 million and $0.70 per share in the prior period.

After excluding the effects of the write-off and certain other adjustments, we recorded adjusted net income before income taxes during the three months ended March 31, 2022 of $200.9 million or $1.76 per diluted share. This increased by approximately 71.6% over the prior period results of $117.1 million or $1.03 per diluted share. This was driven by the continued growth of our fleet and the increase in revenues discussed above.

Flight Equipment Portfolio

As of March 31, 2022 the net book value of our fleet decreased to $22.3 billion, compared to $22.9 billion as of December 31, 2021. The decrease is due to the write-off of the net book value of our 21 aircraft that remain in Russia, totaling approximately $791.0 million, partially offset by the delivery of eight new aircraft from our new order pipeline and one aircraft from the secondary market. As of March 31, 2022, we owned 370 aircraft in our aircraft portfolio, comprised of 268 narrowbody aircraft and 102 widebody aircraft, and we managed 87 aircraft. The 21 aircraft that remain in Russia have been removed from our owned fleet count. The weighted average fleet age and weighted average remaining lease term of our fleet as of March 31, 2022 was 4.5 years and 7.0 years, respectively. We have a globally diversified customer base of 114 airlines in 60 countries.

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

 

March 31, 2022

 

December 31, 2021

Net book value of flight equipment subject to operating lease

$

22.3 billion

 

$

22.9 billion

Weighted-average fleet age(1)

 

4.5 years

 

 

4.4 years

Weighted-average remaining lease term(1)

 

7.0 years

 

 

7.2 years

 

 

 

 

 

 

Owned fleet

 

370

 

 

382

Managed fleet

 

87

 

 

92

Aircraft on order

 

451

 

 

431

Total

 

908

 

 

905

 

 

 

 

 

 

Current fleet contracted rentals

$

14.1 billion

 

$

14.8 billion

Committed fleet rentals

$

15.4 billion

 

$

16.1 billion

Total committed rentals

$

29.5 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:

 

 

March 31, 2022

 

December 31, 2021

Region

 

% of Net Book Value

 

% of Net Book Value

Europe

 

30.2

%

 

32.5

%

Asia (excluding China)

 

27.4

%

 

26.0

%

China

 

13.0

%

 

12.8

%

The Middle East and Africa

 

10.9

%

 

10.7

%

U.S. and Canada

 

7.2

%

 

7.2

%

Central America, South America, and Mexico

 

7.2

%

 

6.8

%

Pacific, Australia, and New Zealand

 

4.1

%

 

4.0

%

Total

 

100.0

%

 

100.0

%

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

 

 

March 31, 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

 

7.5

%

 

31

 

8.1

%

Airbus A320-200neo

 

24

 

6.5

%

 

23

 

6.0

%

Airbus A321-200

 

24

 

6.5

%

 

26

 

6.8

%

Airbus A321-200neo

 

64

 

17.3

%

 

69

 

18.1

%

Airbus A330-200

 

13

 

3.4

%

 

13

 

3.4

%

Airbus A330-300

 

5

 

1.4

%

 

8

 

2.1

%

Airbus A330-900neo

 

10

 

2.7

%

 

9

 

2.4

%

Airbus A350-900

 

12

 

3.2

%

 

12

 

3.1

%

Airbus A350-1000

 

5

 

1.4

%

 

5

 

1.3

%

Boeing 737-700

 

4

 

1.1

%

 

4

 

1.0

%

Boeing 737-800

 

84

 

22.7

%

 

88

 

23.0

%

Boeing 737-8 MAX

 

30

 

8.1

%

 

28

 

7.3

%

Boeing 737-9 MAX

 

8

 

2.2

%

 

7

 

1.8

%

Boeing 777-200ER

 

1

 

0.3

%

 

1

 

0.3

%

Boeing 777-300ER

 

24

 

6.5

%

 

24

 

6.3

%

Boeing 787-9

 

26

 

7.0

%

 

26

 

6.8

%

Boeing 787-10

 

6

 

1.6

%

 

6

 

1.6

%

Embraer E190

 

1

 

0.3

%

 

1

 

0.3

%

Total

 

370

 

100.0

%

 

382

 

100.0

%

Debt Financing Activities

We ended the first quarter of 2022 with total debt financing, net of discounts and issuance costs, of $17.8 billion. As of March 31, 2022, 95.1% of our total debt financing was at a fixed rate and 99.2% was unsecured. As of March 31, 2022, our composite cost of funds was 2.77%. We ended the first quarter with total liquidity of $8.3 billion.

In January 2022, we issued $1.5 billion in aggregate principal amount of senior unsecured notes comprised of (i) $750 million at a fixed rate of 2.20% due 2027 and (ii) $750 million at a fixed rate of 2.875% due 2032.

We amended our Revolving Credit Facility, increasing the total commitments to $7.0 billion across 52 financial institutions as of May 5, 2022, and extending the final maturity by one year to May 5, 2026.

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

 

March 31, 2022

 

December 31, 2021

Unsecured

 

 

 

Senior notes

$

17,695

 

 

$

16,892

 

Term financings

 

195

 

 

 

167

 

Total unsecured debt financing

 

17,890

 

 

 

17,059

 

Secured

 

 

 

Term financings

 

124

 

 

 

127

 

Export credit financing

 

17

 

 

 

18

 

Total secured debt financing

 

141

 

 

 

145

 

 

 

 

 

Total debt financing

 

18,031

 

 

 

17,204

 

Less: Debt discounts and issuance costs

 

(206

)

 

 

(182

)

Debt financing, net of discounts and issuance costs

$

17,825

 

 

$

17,022

 

Selected interest rates and ratios:

 

 

 

Composite interest rate(1)

 

2.77

%

 

 

2.79

%

Composite interest rate on fixed-rate debt(1)

 

2.85

%

 

 

2.90

%

Percentage of total debt at a fixed-rate

 

95.1

%

 

 

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 May 5, 2022 at 4:30 PM Eastern Time to discuss the Company’s financial results for the first quarter of 2022.

Investors can participate in the conference call by dialing (855) 308-8321 domestic or (330) 863-3465 international. The passcode for the call is 7766137.

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 May 5, 2022 until 7:30 PM ET on May 12, 2022. If you wish to listen to the replay of this conference call, please dial (855) 859-2056 domestic or (404) 537-3406 international and enter passcode 7766137.

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. ALC 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. ALC routinely posts information that may be important to investors in the “Investors” section of ALC’s website at www.airleasecorp.com. Investors and potential investors are encouraged to consult the ALC website regularly for important information about ALC. The information contained on, or that may be accessed through, ALC’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 other countries affect our business, including our efforts to pursue insurance claims to recover losses related to aircraft that remain in Russia;
  • 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, 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)

 

 

March 31, 2022

 

December 31, 2021

 

(unaudited)

Assets

 

 

 

Cash and cash equivalents

$

1,490,765

 

 

$

1,086,500

 

Restricted cash

 

21,291

 

 

 

21,792

 

Flight equipment subject to operating leases

 

26,552,246

 

 

 

27,101,808

 

Less accumulated depreciation

 

(4,267,934

)

 

 

(4,202,804

)

 

 

22,284,312

 

 

 

22,899,004

 

Deposits on flight equipment purchases

 

1,626,874

 

 

 

1,508,892

 

Other assets

 

1,451,607

 

 

 

1,452,534

 

Total assets

$

26,874,849

 

 

$

26,968,722

 

Liabilities and Shareholders’ Equity

 

 

 

Accrued interest and other payables

$

544,280

 

 

$

611,757

 

Debt financing, net of discounts and issuance costs

 

17,824,725

 

 

 

17,022,480

 

Security deposits and maintenance reserves on flight equipment leases

 

1,120,234

 

 

 

1,173,831

 

Rentals received in advance

 

135,642

 

 

 

138,816

 

Deferred tax liability

 

880,383

 

 

 

1,013,270

 

Total liabilities

$

20,505,264

 

 

$

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 March 31, 2022 and December 31, 2021, respectively

$

106

 

 

$

106

 

Class A common stock, $0.01 par value; 500,000,000 shares authorized; 111,317,259 and 113,987,154 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

 

1,113

 

 

 

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

 

3,259,105

 

 

 

3,399,245

 

Retained earnings

 

3,109,331

 

 

 

3,609,885

 

Accumulated other comprehensive loss

 

(70

)

 

 

(1,808

)

Total shareholders’ equity

$

6,369,585

 

 

$

7,008,568

 

Total liabilities and shareholders’ equity

$

26,874,849

 

 

$

26,968,722

 

Air Lease Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

 

 

Three Months Ended March 31,

 

 

2022

 

2021

 

 

(unaudited)

Revenues

 

 

 

 

Rental of flight equipment

 

$

566,554

 

 

$

468,095

 

Aircraft sales, trading and other

 

 

30,107

 

 

 

6,732

 

Total revenues

 

 

596,661

 

 

 

474,827

 

 

 

 

 

 

Expenses

 

 

 

 

Interest

 

 

117,277

 

 

 

117,986

 

Amortization of debt discounts and issuance costs

 

 

13,198

 

 

 

12,025

 

Interest expense

 

 

130,475

 

 

 

130,011

 

Depreciation of flight equipment

 

 

235,308

 

 

 

208,965

 

Write-off of Russian fleet

 

 

802,352

 

 

 

 

Selling, general and administrative

 

 

32,762

 

 

 

26,914

 

Stock-based compensation

 

 

(2,523

)

 

 

5,408

 

Total expenses

 

 

1,198,374

 

 

 

371,298

 

(Loss)/income before taxes

 

 

(601,713

)

 

 

103,529

 

Income tax benefit/(expense)

 

 

132,720

 

 

 

(19,437

)

Net (loss)/income

 

$

(468,993

)

 

$

84,092

 

Preferred stock dividends

 

 

(10,425

)

 

 

(3,844

)

Net (loss)/income attributable to common stockholders

 

$

(479,418

)

 

$

80,248

 

 

 

 

 

 

(Loss)/Earnings per share of common stock

 

 

 

 

Basic

 

$

(4.21

)

 

$

0.70

 

Diluted

 

$

(4.21

)

 

$

0.70

 

Weighted-average shares outstanding

 

 

 

 

Basic

 

 

113,894,867

 

 

 

113,958,403

 

Diluted

 

 

113,894,867

 

 

 

114,237,109

 

 

 

 

 

 

Other financial data

 

 

 

 

Pre-tax margin

 

 

(100.8

)%

 

 

21.8

%

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

 

 

(3.5

)%

 

 

9.9

%

Adjusted net income before income taxes(1)

 

$

200,889

 

 

$

117,118

 

Adjusted diluted earnings per share before income taxes(1)

 

$

1.76

 

 

$

1.03

 

Adjusted pre-tax margin(1)

 

 

33.7

%

 

 

24.7

%

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

 

 

11.8

%

 

 

11.0

%

 

(1)

Adjusted net income before income taxes (defined as net income attributable to common stockholders excluding 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), adjusted pre-tax margin (defined as adjusted net income before income taxes divided by total revenues), adjusted diluted earnings per share before income taxes (defined as adjusted net income before income taxes divided by the weighted average diluted common shares outstanding) and adjusted pre-tax return on common equity (defined as adjusted net income before income taxes divided by average common shareholders’ equity) are measures of operating performance that are not defined by GAAP and should not be considered as an alternative to net income attributable to common stockholders, pre-tax margin, earnings per share, diluted earnings per share and pre-tax return on common equity, or any other performance measures derived in accordance with GAAP. Adjusted net income before income taxes, adjusted pre-tax margin, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity are presented as supplemental disclosure because management believes they provide useful information on our earnings from ongoing operations.

 

 

Management and our board of directors use adjusted net income before income taxes, adjusted pre-tax margin, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity to assess our consolidated financial and operating performance. Management believes these measures are helpful in evaluating the operating performance of our ongoing operations and identifying trends in our performance, because they remove the effects of certain non-cash items, one-time or non-recurring items that are not expected to continue in the future and certain other items from our operating results. Adjusted net income before income taxes, adjusted pre-tax margin, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity, however, should not be considered in isolation or as a substitute for analysis of our operating results or cash flows as reported under GAAP. Adjusted net income before income taxes, adjusted pre-tax margin, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity do not reflect our cash expenditures or changes in our cash requirements for our working capital needs. In addition, our calculation of adjusted net income before income taxes, adjusted pre-tax margin, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity may differ from the adjusted net income before income taxes, adjusted pre-tax margin, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity or analogous calculations of other companies in our industry, limiting their usefulness as a comparative measure.

 

 

The following table shows the reconciliation of the numerator for adjusted pre-tax margin (in thousands, except percentages):

Contacts

Investors:
Jason Arnold

Vice President, Finance

Email: investors@airleasecorp.com

Media:
Laura Woeste

Senior Manager, Media and Investor Relations

Email: press@airleasecorp.com

Ashley Arnold

Manager, Media and Investor Relations

Email: press@airleasecorp.com

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