Air Lease Q3 Revenue Falls 7%, FY20 Revenue Up 3.9%
NOV 10, 2020 - 7:33 am
Air Lease reported Q3/20 revenues of $494 million, marking a decrease of 7%. In addition, the company reported revenues of $1.5 billion for the nine months ended Sept. 30, 2020, marking an increase of 3.9%.
“In spite of the difficulties facing the airline industry, ALC produced a solid quarter in terms of operating results, aircraft placements and lease collections. We have a diversified customer base, a young fleet and a strong balance sheet that makes us well-equipped to withstand current and forecasted headwinds. We are working closely with our airline customers around the world and our major suppliers to get through this period of industry stress,” John L. Plueger, CEO and president of Air Lease, said.
Air Lease’s pre-tax profit margin of 31% for Q3/20 compared with 36.5% for the same period in 2019. Adjusted pre-tax profit margin of 33.8% for Q3/20 compared with 38.4% for the same period in 2019.
In Q3/20, Air Lease took delivery of seven aircraft from its orderbook, representing approximately $600 million in aircraft investments. As of Sept. 30, 2020, Air Lease owned 308 aircraft in its operating lease portfolio with a net book value of $19.5 billion, a weighted average age of four years and a weighted average lease term remaining of 6.9 years.
Air Lease placed 90% of its orderbook on long-term leases for aircraft delivering through 2022 and, for the three months ended Sept. 30, 2020, the company had a collection rate of 86% for its operating lease portfolio and a lease utilization rate of 99.6%.
In addition, Air Lease ended the quarter with $27.2 billion in committed minimum future rental payments, consisting of $13.4 billion in contracted minimum rental payments on the aircraft in its existing fleet and $13.8 billion in contracted minimum future rental payments related to aircraft on order.
The company also noted that in response to the effects of the COVID-19 pandemic, as of Nov. 9, it had agreed to accommodations with approximately 58$ of its lessees. These accommodations were generally partial lease deferrals for payments due during the first three quarters of 2020, typically with a short-term repayment period. Through Nov. 9, 2020, Air Lease agreed to defer approximately $201.5 million in lease payments, of which $59.8 million or 30% of the total deferrals have been repaid. These lease deferrals have negatively impacted the company’s cash flow provided by operating activities but only represented approximately 3% of total available liquidity as of Sept. 30, 2020.
Air Lease’s collection rates for the three and nine months ended September 30, 2020 were 86% and 89%, respectively. The company expects its collection rate will remain under pressure because of the impact of COVID-19.
Air Lease also noted that it expects reduced sales activity, less capital expenditure activity and continued changes to delivery schedules. The company also expects transitions of aircraft between lessees to be delayed. The company also reported that it has $7.2 billion in available liquidity.
“To successfully emerge from the downturn and prosper in the years beyond, airlines will need new aircraft, like those in our fleet; concurrently, fewer financing options are available to airlines, which presents ALC with additional business opportunities. We believe in our future, and accordingly, our board of directors authorized a share repurchase program of up to $100 million, as well as an increase in our quarterly common stock dividend to $0.16 per share, which represents the eighth increase and 32nd consecutive dividend payment in ALC’s history,” Steven F. Udvar-Házy, executive chairman of the board for Air Lease, said.
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