Aircastle announces second quarter 2018 results

Eleanor Steed
By Eleanor Steed August 7, 2018 16:57

Aircastle announces second quarter 2018 results

Leasing company, Aircastle, reported revenues of $204.3 million, a decline of $32.8 million, or 13.8%, from the previous year as the company recognised no maintenance revenue in the second quarter of 2018.  During the second quarter of 2017, Aircastle recorded $28.9 million of maintenance revenue, driven by return compensation associated with several wide-body aircraft which transitioned.

During the second quarter of 2018, Aircastle’s annual fleet review had no impairment charges and, as a result, total expenses declined by $90.7 million, or 37.1%.  This was mainly due to $79.9 million of impairment charges that were incurred in the prior year’s second quarter.

Net income in the second quarter was $50.2 million, versus a net loss of $(7.1) million the prior year, while adjusted net income for the quarter was $52.4 million, versus $2.4 million the prior year.  Lower aircraft impairment charges of $79.9 million, interest expense of $4.3 million, SG&A of $3.6 million and depreciation of $2.1 million were partially offset by lower maintenance revenue of $28.9 million.

Depreciation expense declined mainly due to wide-body and freighter aircraft sold over the past year, while interest expense decreased due to lower debt balances and the repayment of higher coupon debt in the prior year.

Adjusted EBITDA for the second quarter was $192.6 million, a decrease of $31.5 million, or 14.0%, from the second quarter of 2017, due primarily to lower maintenance revenue of $28.9 million, as discussed above.

During the period, Aircastle acquired nine narrow-body aircraft for $302 million, sold four narrow-body aircraft for $134 million and recorded gains on sale of $19.9 million. The lessor also acquired or committed to acquire more than $1.2 billion of aviation assets in 2018.

Aircastle received Investment Grade credit rating of BBB- from Standard & Poor’s and Fitch Ratings.

The lessor increased its revolving credit facility to $800 million; extended maturity to June 2022 and reduced the borrowing margin by 75 basis points. The company also declared its  49th consecutive quarterly dividend and repurchased $13.7 million of its shares year-to-date at average price of $19.62 per share.

Commenting on the results, Mike Inglese, Aircastle’s Chief Executive Officer, stated, “Through the first half of the year, with over $1.2 billion of aircraft acquired or committed to be acquired in 2018, along with a steady stream of profitable aircraft sales, Aircastle remains active in the secondary market for modern, in-demand aircraft.  In addition to producing excellent second quarter results, we were awarded investment grade credit ratings from two major credit ratings agencies, Standard & Poor’s and Fitch. This significant milestone broadens our already strong base of liquidity and enhances our ability to access competitively priced capital to support ongoing fleet expansion.”

Inglese concluded, “Our disciplined growth strategy, solid balance sheet, strong operational capabilities and shareholder-friendly capital allocation policy place Aircastle in an excellent position to increase shareholder value both near-term and over the long-run.”

Eleanor Steed
By Eleanor Steed August 7, 2018 16:57