Kroll Bond Rating Agency (KBRA) affirmed its ratings for Air Lease Corporation (NYSE: AL), maintaining a long-term issuer and senior unsecured debt rating of A-, a preferred shares rating of BBB, and a short-term debt rating of K1. The outlook for all long-term ratings remains Stable.
The Los Angeles-based aircraft leasing company also saw its A- rating affirmed on the senior unsecured sukuk trust certificates issued by Air Lease Corporation Sukuk Limited.
KBRA cited Air Lease’s strong financial position, noting its $8.1 billion in available liquidity at year-end 2024, as well as the company’s access to unsecured capital markets and largely unencumbered asset base. The agency also highlighted the company’s young aircraft fleet, diversified customer base, and a sizable order book that supports long-term growth.
As of December 31, 2024, Air Lease reported a net debt-to-equity ratio of 2.6x, in line with its target of 2.5x. KBRA’s adjusted leverage ratio, which gives 75 percent equity credit for the company’s non-cumulative preferred shares, stood at 2.7x. The agency expects leverage to return to target levels as retained earnings grow.
The firm’s commercial paper program—authorized up to $2 billion—also received a K1 short-term debt rating, supported by strong liquidity and $7.6 billion in undrawn borrowing capacity at year-end.
Risks to the rating include industry cyclicality, potential credit deterioration among airline customers, and the scale of Air Lease’s forward aircraft commitments. KBRA also noted key person risk, though it said this is mitigated by the company’s experienced leadership and succession planning.
Upgrades are unlikely in the near term due to the inherent volatility of the aviation sector and the company’s reliance on wholesale funding. A downgrade could be triggered by a decline in air traffic, weakening liquidity, or a substantial rise in asset encumbrance.
Air Lease Corporation is a global aircraft lessor serving airlines worldwide. KBRA’s full rating reports and methodologies are available at www.kbra.com.
