Air Lease Corporation Announces First Quarter 2021 Results

Air Lease Corporation (ALC) (NYSE: AL) announces financial results for the three months ended March 31, 2021.

“We continued helping our customers through a difficult winter season in Q4 and Q1 and we are hopeful that the worst of the global pandemic is behind us. The world’s airlines need much more time for financial recovery, yet fleet renewal remains a top priority and we are heavily involved in this process. For Q1, we exceeded our aircraft investment expectations, and our operating cash flow increased modestly relative to last year’s pre-pandemic first quarter. We see accelerating domestic traffic recovery in multiple geographic regions, with expectations of improvement over the remainder of 2021 in regions still heavily impacted,” said John L. Plueger, Chief Executive Officer and President.

“Lease placements from our forward orderbook are tracking well, as airlines recognize that re-fleeting with the most environmentally friendly and fuel efficient aircraft is key to their long term prosperity and future. Lease financing is increasingly critical to airline fleet restructuring, and ALC's focus on new aircraft places us at the leading-edge of industry demand. We believe the recovery in the US and China are harbingers of what will occur globally as travel restrictions are relaxed and vaccines are more widely distributed,” said Steven F. Udvar-Házy, Executive Chairman of the Board.

First Quarter 2021 Results

The following table summarizes our operating results for the three months ended March 31, 2021 and 2020 (in millions, except per share amounts and percentages):

Financial Highlights

Financial Ratios

First Quarter 2021 Highlights

• Took delivery of 10 aircraft from our orderbook, representing approximately $602 million in aircraft investments. As of March 31, 2021, we owned 342 aircraft in our operating lease portfolio with a net book value of $20.8 billion, a weighted average age of 4.3 years and a weighted average lease term remaining of 6.9 years.
• Placed 95% of our contracted orderbook positions on long-term leases for aircraft delivering through the end of 2022 and 80% through the end of 2023.
• Ended the quarter with $26.8 billion in committed minimum future rental payments consisting of $13.4 billion in contracted minimum rental payments on the aircraft in our existing fleet and $13.4 billion in minimum future rental payments related to aircraft on order.
• To date, 46% of the lease deferrals granted have been repaid, representing $111.6 million. This contributed to the increase in our operating cash flow for the quarter, despite lower rental revenues as compared to prior year’s pre-pandemic first quarter.
• Issued 300,000 shares of 4.65% Fixed-Rate Reset Non-Cumulative Perpetual Series B Preferred Stock (the “Series B Preferred Stock”), $0.01 par value resulting in approximately $300.0 million in proceeds.
• In April 2021, we completed an amendment to our syndicated unsecured revolving credit facility (the “Revolving Credit Facility”), increasing the capacity to $6.4 billion and extending the final maturity to May 2025.
• Declared a quarterly cash dividend of $0.16 per share on our outstanding Class A common stock for the first quarter of 2021. The dividend will be paid on July 9, 2021 to holders of record of our common stock as of June 8, 2021. In addition, our board of directors granted a six-month extension to our share repurchase program, which authorized a repurchase of up to $100.0 million of our Class A common stock through December 31, 2021.

Financial Overview

Our total revenues for the three months ended March 31, 2021 decreased by 7.1% to $474.8 million compared to the three months ended March 31, 2020. Despite the continued growth of our fleet, our revenues decreased in the first three months of 2021 compared to the first three months of 2020 as a result of the full quarter impact of the COVID‑19 pandemic, which only partially impacted the first three months of 2020 when the pandemic began. During the three months ended March 31, 2021, we were not able to recognize $48.7 million of rental revenue because lease receivables exceeded the lease security package held and collection was not reasonably assured for certain of our leases. In addition, we entered into lease restructurings, which typically included lease extensions, that resulted in a decrease of $37.0 million in revenue. Our net income available to common stockholders for the three months ended March 31, 2021 was $80.2 million compared to $133.3 million in 2020. Our diluted earnings per share for the full year 2021 was $0.70 compared to $1.17 for the three months ended 2020. The decrease in net income available to common stockholders in 2021 as compared to 2020 was primarily due to the decrease in revenues as discussed above and an increase in depreciation and interest expense from the growth of our fleet, partially offset by a decrease in selling, general and administrative expenses.

Impact of COVID‑19

The global pandemic resulting from COVID‑19 has had an unprecedented impact and disrupted the operations of our lessees, aircraft manufacturers and suppliers. In response to the COVID‑19 pandemic, governments around the world implemented numerous measures to try to contain the virus, including travel restrictions. It is unclear how long and to what extent these measures will remain in place and they may remain in place in some form for an extended period of time. The impact of the COVID‑19 pandemic to our business includes, among other things, the following:

• As of May 6, 2021, most of our lessees have requested some form of accommodation. We evaluate such requests on a case-by-case basis and have agreed to accommodations with approximately 63% of our lessees. To date, we have agreed to defer $242.6 million in lease payments, of which $111.6 million or 46% of the total deferral amount has been repaid. As of May 6, 2021, our total deferrals, net of repayments, was $131.0 million. While these lease deferrals negatively impacted our cash flow provided by operating activities, our net deferrals represented approximately 1.7% of our total available liquidity as of March 31, 2021. While the majority of the accommodations are in the form of lease deferrals, we have also entered into some lease restructurings, which resulted in a decrease of $37.0 million in revenue for the three months ended March 31, 2021.
• Our collection rate⁽¹⁾ for the three months ended March 31, 2021 was 84%, compared to 88% for the three months ended December 31, 2020. We expect that our collection rate will remain under pressure due to the impact of COVID‑19. As lease receivables exceeded the lease security package held and collection was not reasonably assured with certain lessees, we did not recognize rental revenue of $48.7 million for the quarter ended March 31, 2021 compared to $21.2 million for the quarter ended December 31, 2020. Aircraft on lease with these lessees represented approximately 15.3% of our fleet by net book value as of March 31, 2021 as compared to 7.8% as of December 31, 2020. The increase in rental revenue not recognized for the first quarter was primarily driven by a few customers with whom we are working toward resolution.
• Our Lease Utilization Rate⁽²⁾ for the quarters ended March 31, 2021 and December 31, 2020 was 99.6% and 99.8%, respectively.
• While we have planned our capital expenditures for the remainder of 2021 and beyond based on currently expected delivery schedules, given the current industry circumstances, our aircraft delivery schedule could continue to be subject to material changes. In any case, our capital expenditures will be less than what we planned prior to the pandemic, which will slow our revenue growth, but will further improve our strong liquidity position. Although we expect aircraft sales activity to increase in 2021 compared to 2020, we do not anticipate that aircraft sales activity will return to pre-pandemic levels during 2021.
• As a result of travel restrictions and other impacts from COVID‑19, we expect some challenges when transitioning, acquiring or selling aircraft.
• COVID‑19 has caused disruption in the financial markets. However, during the COVID‑19 pandemic, we have continued to access the unsecured debt capital markets issuing approximately $3.8 billion in aggregate principal Medium-Term Notes with a weighted average interest rate of 2.6%. In addition, we issued 300,000 shares of Series B Preferred Stock for $300.0 million in proceeds and increased capacity on our Revolving Credit Facility to $6.4 billion, extending the final maturity to 2025. We ended the quarter with a significant liquidity position of $7.5 billion.

Given the dynamic nature of this situation, we cannot reasonably estimate the continued impacts of COVID‑19 on our business, results of operations and financial condition for the foreseeable future.

Flight Equipment Portfolio

Our owned fleet grew by 1.9% to a net book value of $20.8 billion as of March 31, 2021 compared to $20.4 billion as of December 31, 2020. As of March 31, 2021, our fleet was comprised of 342 aircraft in our operating lease portfolio, with a weighted-average age and a weighted-average remaining lease term of 4.3 years and 6.9 years, respectively, and 83 managed aircraft. As of March 31, 2021, we had a globally diversified customer base of 113 airlines in 59 countries.

During the quarter ended March 31, 2021, we took delivery of 10 aircraft from our orderbook. Approximately 73% of the net book value of our fleet were leased to flag carriers or airlines that have some form of governmental ownership.

We and airlines around the world have continued to experience delivery delays from Boeing and Airbus and have been impacted by ongoing manufacturer delays due to the COVID-19 pandemic, delays related to the grounding of the Boeing 737 MAX, temporary suspension of Boeing 787 deliveries, and pre-pandemic Airbus delays that remain ongoing. These delays and the ongoing COVID-19 pandemic have also impacted passenger growth and airline profitability and we expect this to continue. As a result of continued manufacturing delays and the impact of COVID-19, our aircraft delivery schedule could continue to be subject to material changes and delivery delays could potentially extend well into 2022 and beyond.

The following table summarizes the key portfolio metrics of our fleet as of March 31, 2021 and December 31, 2020:

The following table details the regional concentration of our flight equipment subject to operating leases:

The following table details the composition of our flight equipment subject to operating leases by aircraft type:

Debt Financing Activities

We ended the first quarter of 2021 with total debt financing, net of discounts and issuance costs, of $16.2 billion, with a debt to equity ratio of 2.51:1 and available liquidity of $7.5 billion. During the three months ended March 31, 2021, we issued $750.0 million of Medium-Term Notes due 2024 at a fixed rate of 0.70%.

In April 2021, we entered into an amendment to increase the capacity on our Revolving Credit Facility to $6.4 billion and extended the final maturity to 2025.

As of the end of the periods presented our debt portfolio was comprised of the following components (dollars in millions):

Conference Call

In connection with this earnings release, Air Lease Corporation will host a conference call on May 6, 2021 at 4:30 PM Eastern Time to discuss the Company’s financial results for the first quarter of 2021.

Investors can participate in the conference call by dialing (855) 308‑8321 domestic or (330) 863‑3465 international. The passcode for the call is 6699014.

The conference call will also be broadcast live through a link on the Investor Relations page of the Air Lease Corporation website at www.airleasecorp.com. Please visit the website at least 15 minutes prior to the call to register, download and install any necessary audio software. A replay of the broadcast will be available on the Investor Relations page of the Air Lease Corporation website.

For your convenience, the conference call can be replayed in its entirety beginning at 7:30 PM ET on May 6, 2021 until 7:30 PM ET on May 13, 2021. If you wish to listen to the replay of this conference call, please dial (855) 859‑2056 domestic or (404) 537‑3406 international and enter passcode 6699014.

About Air Lease Corporation (NYSE: AL)

Air Lease Corporation is a leading aircraft leasing company based in Los Angeles, California that has airline customers throughout the world. ALC and its team of dedicated and experienced professionals are principally engaged in purchasing commercial aircraft and leasing them to its airline customers worldwide through customized aircraft leasing and financing solutions. ALC routinely posts information that may be important to investors in the "Investors" section of ALC’s website at www.airleasecorp.com. Investors and potential investors are encouraged to consult the ALC website regularly for important information about ALC. The information contained on, or that may be accessed through, ALC’s website is not incorporated by reference into, and is not a part of, this press release.

Forward-Looking Statements

This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those statements appear in a number of places in this press release and include statements regarding, among other matters, the state of the airline industry, the impact of the coronavirus (“COVID‑19”) pandemic on us, our lessees and aircraft manufacturers, our anticipated capital expenditures and aircraft sales, aircraft delivery delays and other factors affecting our financial condition or results of operations. Words such as “can,” “could,” “may,” “predicts,” “potential,” “will,” “projects,” “continuing,” “ongoing,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and “should,” and variations of these words and similar expressions, are used in many cases to identify these forward-looking statements. Any such forward-looking statements are not guarantees of future performance and involve risks, uncertainties, and other factors that may cause our actual results, performance or achievements, or industry results to vary materially from our future results, performance or achievements, or those of our industry, expressed or implied in such forward-looking statements. Such factors include, among others:

• the extent to which the COVID‑19 pandemic and measures taken to contain its spread ultimately impact our business, results of operation and financial condition;
• our inability to obtain additional capital on favorable terms, or at all, to acquire aircraft, service our debt obligations and refinance maturing debt obligations;
• increases in our cost of borrowing or changes in interest rates;
• our inability to generate sufficient returns on our aircraft investments through strategic acquisition and profitable leasing;
• the failure of an aircraft or engine manufacturers to meet its delivery obligations to us, including or as a result of technical or other difficulties with aircraft before or after delivery;
• obsolescence of, or changes in overall demand for, our aircraft;
• changes in the value of, and lease rates for, our aircraft, including as a result of aircraft oversupply, manufacturer production levels, our lessees’ failure to maintain our aircraft, and other factors outside of our control;
• impaired financial condition and liquidity of our lessees, including due to lessee defaults and reorganizations, bankruptcies or similar proceedings;
• increased competition from other aircraft lessors;
• the failure by our lessees to adequately insure our aircraft or fulfill their contractual indemnity obligations to us;
• increased tariffs and other restrictions on trade;
• changes in the regulatory environment, including changes in tax laws and environmental regulations;
• other events affecting our business or the business of our lessees and aircraft manufacturers or their suppliers that are beyond our or their control, such as the threat or realization of epidemic diseases in addition to COVID‑19, natural disasters, terrorist attacks, war or armed hostilities between countries or non-state actors; and
• any additional factors discussed under “Part I — Item 1A. Risk Factors,” in our Annual Report on Form 10‑K for the year ended December 31, 2020 and other SEC filings, including future SEC filings.

The factors noted above and the risks included in our other SEC filings may be increased or intensified as a result of the COVID‑19 pandemic, including as a result of ongoing resurgences of the COVID‑19 virus and its variants. The extent to which the COVID‑19 pandemic ultimately impacts our business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted. All forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations. You are therefore cautioned not to place undue reliance on such statements. Any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

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