Aircastle Announces Third Quarter 2021 Results

STAMFORD. Conn., Jan. 13, 2022 /PRNewswire/ --

Key Financial Metrics for the Three Months ended November 30, 2021

• Total revenues of $191 million
• Net loss of $62 million primarily a result of net non-cash aircraft impairment charges of $45 million
• Cash collections represented 100% of lease rental and direct financing and sales-type lease revenues
• Adjusted EBITDA⁽¹⁾ of $174 million
• Gain on sale of flight equipment of $7 million

Highlights

• For the three months ended November 30, 2021, Lease rental revenue of $156 million, up 13% versus second quarter 2021
• For the nine months ended November 30, 2021, Cash flow from operations increased 118% compared to 2020
• Acquired four aircraft during the quarter including an A320neo, a B737-MAX8 and one E2 aircraft to KLM Cityhopper with a further delivery to KLM Cityhopper in December
• Acquired twelve aircraft during the nine months ended November 30, 2021, ten (or 83%) of which were new fuel-efficient technology aircraft
• For the nine months ended November 30, 2021, sold seven aircraft and other flight equipment for proceeds of $128 million and a total gain on sale of $18 million

Liquidity

• As of January 1, 2022, total liquidity of $2.1 billion includes $1.4 billion of undrawn credit facilities, $0.2 billion of unrestricted cash, $0.1 billion of contracted asset sales, and $0.4 billion of projected adjusted operating cash flows through January 1, 2023
• We have 223 unencumbered aircraft with a net book value of $5.6 billion

Mike Inglese, Aircastle's Chief Executive Officer, commented, "Despite new challenges from the omicron variant, global aviation continues to adapt, adjust, and improve. Demand is strong for domestic flights while international travel continues to work through an uneven recovery. We hope that governments will align their control measures to address the new variant effectively. Meanwhile, Aircastle will continue to pursue the strategy that has brought us to where we are now, with stronger revenues and improved cash collections. We remain focused on liquidity, collecting cash, working creatively with customers who might be struggling, and - importantly- moving forward with strategic, new-technology investments."

Mr. Inglese concluded, "Aircraft leasing has proven to be a resilient sector over the past two years as evidenced by the competitive levels of capital flowing into this space. We believe our favorable credit rating, along with the opportunities afforded by our unique ownership arrangement with the Marubeni Corporation and Mizuho Leasing, strategically position us for disciplined future growth."

Aviation Assets

As of November 30, 2021, Aircastle owned 255 aircraft and other flight equipment having a net book value of $6.7 billion.  We also manage nine aircraft with a net book value of $302 million on behalf of our joint venture with Mizuho Leasing.

Aircraft Impairments

During the third quarter we recorded transactional impairment charges totaling $69.1 million related two narrow-body and one wide-body aircraft on lease to Garuda Indonesia, resulting from the lessee's default on its lease obligations.  We recognized $24.3 million of maintenance revenue for these three aircraft.

We completed our annual recoverability assessment of all our aircraft during the third quarter – no impairments were recorded as a result of our annual recoverability assessment.

Deferrals   

While the airline industry is slowly recovering, airlines continue to seek support from their respective governments, raise debt and equity, delay or cancel new aircraft orders, furlough employees, request concessions from lessors, and in certain cases, seek judicial protections. As of January 7, 2022, six of our airline customers were subject to judicial insolvency proceedings or similar protection.  We lease 21 aircraft to these customers, which comprise 13% of our net book value of flight equipment and 12% of our reported lease rental and direct financing and sales-type lease revenues for the twelve months ended November 30, 2021.  While additional airline bankruptcies and liquidations may yet occur in future periods, we remain confident that our core customers who are leading low-cost carriers and major US and global carriers, have the means to survive the ongoing COVID-19 crisis.  

As of January 7, 2022, our total deferrals, net of repayments, were $87 million. These deferrals have been granted to nineteen airlines for an average of six to twelve months of lease rentals and represent 15% of Lease rental and Direct financing and sales-type lease revenues for the twelve months ended November 30, 2021.  Of the total deferrals, $82 million are included in our November 30, 2021, Consolidated Balance Sheet with the balance representing future lease payments.  As of January 7, 2022, 87% of our total deferrals have been agreed to as part of broader lease restructurings. Many of these restructurings generally include term extensions, better security packages or other valuable consideration in exchange for near-term economic concessions.    

We hold $499 million of maintenance reserves and $73 million of security deposits, as well as an additional $143 million in letters of credit from our lessees.  These total $715 million, represent 11% of our net book value of flight equipment, and provide significant protection against potential future airline failures and the unscheduled return of additional aircraft.   

Conference Call

In connection with this press release, management will host a conference call on Wednesday, January 13, 2022, at 9:00 A.M. Eastern Time.  All interested parties are welcome to participate on the live call.  The conference call can be accessed by dialing (888) 394-8218 (from within the U.S. and Canada) or (646) 828-8193 (from outside of the U.S. and Canada) ten minutes prior to the scheduled start and referencing the passcode "3653488".

A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.aircastle.com.  Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast. 

For those who are not available to listen to the live call, a replay will be available until 12:00 P.M. Eastern Time on Saturday, February 12, 2022, by dialing (888) 203-1112 (from within the U.S. and Canada) or (719) 457-0820 (from outside of the U.S. and Canada); please reference passcode "3653488".

About Aircastle Limited

Aircastle Limited acquires, leases, and sells commercial jet aircraft to airlines throughout the world.  As of November 30, 2021, Aircastle owned and managed on behalf of its joint ventures 264 aircraft leased to 79 customers located in 43 countries.

Safe Harbor
All statements in this press release, other than characterizations of historical fact, are forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, but are not necessarily limited to, statements relating to our proposed public offering of notes and our ability to acquire, sell, lease or finance aircraft, raise capital, pay dividends, and increase revenues, earnings, EBITDA and Adjusted EBITDA and the global aviation industry and aircraft leasing sector. Words such as "anticipates," "expects," "intends," "plans," "projects," "believes," "may," "will," "would," "could," "should," "seeks," "estimates" and variations on these words and similar expressions are intended to identify such forward-looking statements. These statements are based on our historical performance and that of our subsidiaries and on our current plans, estimates and expectations and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements; Aircastle can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any such forward-looking statements which are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this press release. These risks or uncertainties include, but are not limited to, those described from time to time in Aircastle's filings with the SEC and previously disclosed under "Risk Factors" in Item 1A of Aircastle's most recent Form 10-K and any subsequent filings with the SEC.  In addition, new risks and uncertainties emerge from time to time, and it is not possible for Aircastle to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. Aircastle expressly disclaims any obligation to revise or update publicly any forward-looking statement to reflect future events or circumstances.   

Contact:
Aircastle Advisor LLC
Jim Connelly, SVP ESG & Corporate Communications
Tel: +1-203-504-1871
[email protected]

* Included $32.5 million in Other expense and $2.6 million in Selling, general and administrative expenses.

We define EBITDA as income (loss) from continuing operations before income taxes, interest expense, and depreciation and amortization. We use EBITDA to assess our consolidated financial and operating performance, and we believe this non-U.S. GAAP measure is helpful in identifying trends in our performance.

This measure provides an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current financial goals, as well as achieving optimal financial performance. It provides an indicator for management to determine if adjustments to current spending decisions are needed.

EBITDA provides us with a measure of operating performance because it assists us in comparing our operating performance on a consistent basis as it removes the impact of our capital structure (primarily interest charges on our outstanding debt) and asset base (primarily depreciation and amortization) from our operating results. Accordingly, this metric measures our financial performance based on operational factors that management can impact in the short-term, namely the cost structure, or expenses, of the organization. EBITDA is one of the metrics used by senior management and the Board of Directors to review the consolidated financial performance of our business.

We define Adjusted EBITDA as EBITDA (as defined above) further adjusted to give effect to adjustments required in calculating covenant ratios and compliance as that term is defined in the indenture governing our senior unsecured notes. Adjusted EBITDA is a material component of these covenants.

SOURCE Aircastle Limited