Aircastle announces second quarter 2017 results

Eleanor Steed
By Eleanor Steed August 9, 2017 16:33

Aircastle announces second quarter 2017 results

Aircastle has reported total revenues of $223.5 million for the second quarter of 2017, up 18%, with total lease rental and finance and sales-type lease revenues were $195.0 million, up 8%. Aircastle announced a loss of $(7.1) million, or $(0.09) per diluted common share, which includes $65.7 million of net aircraft impairment charges related to freighter aircraft sales, and $5.1 million of separation and disability compensation paid to its former Chief Executive. Adjusted net income was $2.4 million, or $0.03 per diluted common share, adjusted EBITDA was $224.1 million for the second quarter, up 23%.

During the quarter, Aircastle acquired seven mid-aged narrow-body aircraft for approximately $86 million; sold thirteen aircraft for proceeds of $221.5 million and a gain on sale of $13.5 million; and further reduced its exposure to freighter aircraft by agreeing to sell two 747-400 production freighters and one converted freighter. Aircastle also repaid $500 million of 6.75% coupon debt and borrowed $500 million of 4.125% coupon debt; $13.1 million of annual interest expense savings, or approximately $0.17 per share, and declared its 45th consecutive quarterly dividend

Commenting on the results, Mike Inglese, Aircastle’s CEO, stated, “Our strong core results in the second quarter highlight the portfolio de-risking that we have pursued since the beginning of 2015.  Over the past two and a half years, we have taken advantage of market conditions to sell 75 aircraft, generating $111 million in gains on sale, while also enhancing the quality of our fleet.  During that time, we also acquired 121 aircraft for $3.3 billion.”

“In addition to our solid operating performance, during the first six months of 2017, we opportunistically sold fourteen aircraft and realized gains of more than $14 million.  During the second quarter, we also reduced our freighter exposure by more than 45% by taking the opportunity to sell two younger production freighters to a carrier in Asia.  Our three remaining production freighters are on longer term leases, and our orderly exit from the cargo market, which began several years ago, is nearing completion.”

Inglese added, “Aircastle’s core business is strong, and we are poised for accretive growth in the second half of 2017.  Our limited long-term capital commitments, significant financial flexibility, and proven value investment approach position us to continue to grow the business in a disciplined and profitable manner.”

As of June 30, 2017, Aircastle owned and managed 203 aircraft with a net book value of $6.8 billion.  Of this total, 190 aircraft having a net book value of $6.2 billion are owned, while Aircastle manages an additional thirteen aircraft with a net book value of approximately $675 million on behalf of its joint ventures with Ontario Teachers’ Pension Plan and IBJL Leasing.  For the second half of 2017, Aircastle has closed or committed to close approximately $950 million of additional aircraft investments, and expects to sell approximately $600 million.

For the year-to-date, Aircastle has secured $500 million of new financing.  During the first quarter of 2017, the lessor issued $500 million in unsecured Senior Notes due 2024 bearing a coupon of 4.125%.  On April 17, 2017, Aircastle repaid $500 million of maturing, unsecured Senior Notes bearing a coupon of 6.75%.  The associated annual interest expense savings is approximately $13.1 million.

Eleanor Steed
By Eleanor Steed August 9, 2017 16:33