FLY Leasing Signs Merger Agreement with Carlyle Aviation, Reports Net Loss in Q1/21



FLY Leasing reported total revenues of $80.9 million in Q1/21. It also reported a net loss of $3.4 million in the quarter compared with net income of $38.1 million during Q1/20. During the quarter, FLY Leasing also signed a merger agreement to be acquired by Carlyle Aviation Partners for $17.05 per share. In addition, Fly Leasing reported unrestricted cash and cash equivalents of $117.2 million as well as $157 million of net book value of unencumbered assets.

“The pending acquisition of FLY by an affiliate of Carlyle Aviation Partners is on track and is expected to close in the third quarter,” Colm Barrington, CEO of FLY Leasing, said. “We believe that this transaction represents strong value for FLY shareholders, with the per share cash consideration representing a premium of nearly 30% to FLY’s closing price on March 26, 2021, the last trading day prior to the merger announcement.

“In the quarter, FLY’s revenues and net income were again adversely impacted by the global pandemic. While we are seeing improvements in some sectors of the global airline industry, particularly in U.S. and Chinese domestic traffic, there are still large parts of the world where COVID-19 is surging and both domestic and international air traffic is at a virtual standstill due to continuing travel restrictions. It now appears likely that it will be well into 2022 before global air traffic returns towards 2019 levels.”

FLY Leasing further reported an adjusted net loss of $1.4 million in Q1/21 compared with adjusted net income of $43.6 million for the same period in 2020.

At March 31, 2021, FLY Leasing’s total assets were $3.1 billion, including investment in flight equipment totaling $2.8 billion. Total cash at March 31, 2021, was $151.2 million, of which $117.2 million was unrestricted. At March 31, 2021, FLY Leasing’s net debt-to-equity ratio was 2.2x, reduced from 2.3x as of Dec. 31, 2020.

Merger Details

Under the terms of the merger agreement with Carlyle Aviation Partners, FLY Leasing shareholders will receive $17.05 per share in cash, representing a total equity valuation of approximately $520 million. The total enterprise value of the transaction is approximately $2.36 billion. The transaction is expected to close in Q3/21 and is subject to customary closing conditions, including applicable regulatory clearance and the approval of FLY Leasing’s shareholders. During Q1/21, FLY Leasing recognized $5.9 million of costs associated with the pending transaction.

Aircraft Portfolio

At March 31, 2021, FLY Leasing had 84 aircraft and seven engines in its portfolio. FLY Leasing’s aircraft and engines are on lease to 36 airlines in 22 countries. The table below does not include engines.

Portfolio at Mar. 31, 2021 Dec. 31, 2020
Number % of Net Book
Value
Number % of Net Book
Value
Airbus A320ceo Family 32 28% 32 28%
Airbus A320neo Family 1 2% 1 2%
Airbus A330 3 2% 3 2%
Boeing 737NG 40 39% 40 39%
Boeing 737 MAX 2 3% 2 3%
Boeing 777-LRF 2 11% 2 11%
Boeing 787 4 15% 4 15%
      Total(1) 84 100% 84 100%
(1) Includes six aircraft classified as held for sale as of March 31, 2021. No aircraft were classified as held for sale as of Dec. 31, 2020.

 

At March 31, 2021, the average age of the portfolio, weighted by net book value of each aircraft and engine, was 8.6 years. The average remaining lease term was 4.7 years, also weighted by net book value.

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