Air Lease Corporation Announces Third Quarter 2014 Results

LOS ANGELES—(BUSINESS WIRE)—Air Lease Corporation (ALC) (NYSE: AL) announced today financial results for the three and nine months ended September 30, 2014.

“Part I – Item 1A. Risk Factors”

Highlights

Air Lease Corporation reported another consecutive quarter of fleet, revenue and profitability growth:

Diluted EPS increased 26% to $0.58 per share for the three months ended September 30, 2014 compared to $0.46 per share for the three months ended September 30, 2013.
Revenues increased 21% to $262 million for the three months ended September 30, 2014 compared to $216 million for the three months ended September 30, 2013.
Income before taxes increased 29% to $96 million with a pretax profit margin of 37% for the three months ended September 30, 2014 compared to income before taxes of $75 million with a pretax profit margin of 35% for the three months ended September 30, 2013.
Recorded $8.8 million in gains on aircraft sales, trading and other activity for the three months ended September 30, 2014.
Completed two senior unsecured notes offerings in September 2014 totaling $1 billion, comprised of $500 million due 2018 at 2.125% and $500 million due 2024 at $4.25%. These transactions increased our liquidity, the duration of our debt portfolio and the amount of debt at a fixed rate.
In November 2014, the Company entered into a joint venture with Napier Park Global Capital (US) LP. The joint venture is expected to acquire up to $2 billion of aircraft assets by year-end 2016. The Company will provide management services to the joint venture for a fee based upon aircraft assets managed. See the Company’s press release issued on November 6, 2014 for additional details on this transaction.
Our Board of Directors declared a quarterly cash dividend of $0.04 per share on our outstanding common stock, representing a $0.01 increase from our previous quarterly cash dividend. The dividend will be paid on January 5, 2015 to holders of record of our common stock as of December 12, 2014.

“In the third quarter, ALC continued along its steady growth path by increasing revenues and profitability once again. Our business remains strong. This past week ALC formed a joint venture with Napier Park Global Capital (US) LP with the objective of acquiring approximately $2 billion of aircraft over the next 24 months with ALC managing those aircraft for many years in the future. This partnership will significantly grow our management business and allow us another tool to better serve our airline customers,” said Steven F. Udvar-Házy, Chairman and Chief Executive Officer of Air Lease Corporation.

“Despite global headlines, we continue to see an overall healthy aviation ecosystem highlighted by growing passenger traffic and demand exceeding supply for our modern, fuel efficient jets. Sales of used aircraft continue at good levels. We delivered nine new aircraft from our pipeline during the quarter and sold four aircraft for a gain of $8.8 million. Capital access for investment grade companies remains strong. We issued $1 billion in senior unsecured notes including a $500 million 10 year issuance at attractive terms,” said John L. Plueger, President and Chief Operating Officer of Air Lease Corporation.

Flight Equipment Portfolio

As of September 30, 2014, we owned 212 aircraft in our operating lease portfolio and we leased the aircraft to a globally diversified customer base of 77 airlines in 47 countries. During the quarter ended September 30, 2014, we delivered nine aircraft from our new order pipeline. In addition, we sold four aircraft from our operating lease portfolio during the quarter ended September 30, 2014. As of September 30, 2014, we managed 12 aircraft for third parties.

Debt Financing Activities

We ended the third quarter of 2014 with total debt outstanding of $6.6 billion as compared to $5.9 billion as of December 31, 2013. We have built a globally diversified group of banking relationships, which has provided us in excess of $4.2 billion in financing and we have successfully accessed the debt capital markets for $4.8 billion in unsecured financing. We ended the third quarter of 2014 with total unsecured debt outstanding of $5.4 billion compared to $4.3 billion as of December 31, 2013, increasing the Company’s unsecured debt as a percentage of total debt to 81.8% as of September 30, 2014 compared to 73.4% as of December 31, 2013. The Company’s fixed rate debt as a percentage of total debt increased to 76.3% as of September 30, 2014 from 61.9% as of December 31, 2013.

We ended the third quarter of 2014 with a debt to equity ratio of 2.47:1 and available liquidity of $2.1 billion. Our financing strategy remains focused on raising unsecured debt in the global bank and capital markets.