STAMFORD, Conn., Oct. 13, 2021 /PRNewswire/ --

Key Financial Metrics for the Three Months ended August 31, 2021

  • Total revenues of $157.7 million
  • Net income of $9.8 million
  • Adjusted EBITDA(1) of $197.5 million
  • Gain on sale of flight equipment of $1.5 million

Highlights for the Three Months ended August 31, 2021

  • Delivered four new Airbus A320neo aircraft to Frontier Airlines, completing four-aircraft deal; acquired two additional single-aisle aircraft
  • Issued $400 million of Preference Shares at a coupon of 5.25%; issue was four times oversubscribed
  • Generated sales proceeds of $55 million from the sale of bankruptcy claims
  • For the first six months cash flows from operations increased to $180 million, up 57%, from first quarter 2021
  • In June, Moody's upgraded Aircastle's outlook to Stable
  • For the six months ended August 31, 2021, sold four aircraft and other flight equipment for proceeds of $78 million and a total gain on sale of $11 million

Liquidity

  • As of October 1, 2021, total liquidity of $2.4 billion includes $1.4 billion of undrawn credit facilities, $0.3 billion of unrestricted cash, $0.3 billion of contracted asset sales, and $0.4 billion of projected adjusted operating cash flows through October 1, 2022
  • For the three months ended August 2021, collections represented approximately 87% of lease rental and direct financing and sales-type lease revenues
  • We have 223 unencumbered aircraft with a net book value of $5.6 billion

Mike Inglese, Aircastle's Chief Executive Officer, commented, "We are on the recovery side of what has been the worst economic shock in aviation history. Traffic levels in China, the US, Mexico, Brazil, Russia and parts of Europe have shown near-2019 air traffic volumes. The recent announcement of the re-opening of the US to all vaccinated travelers should bode well for long haul traffic. Our laser-focus on liquidity has helped us to keep cashflows strong and move forward with strategic investing."

Mr. Inglese concluded, "Aircraft leasing has been a vital source of capital for airlines looking to de-lever their balance sheets as global aviation continues to recover, aided by the narrowing vaccine gap. 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 future growth."

Aviation Assets

As of August 31, 2021, Aircastle owned 255 aircraft and other flight equipment having a net book value of $6.8 billion. We also manage nine aircraft with a net book value of $305 million dollars on behalf of our joint venture with Mizuho Leasing.

Owned Aircraft

As of
Aug 31, 2021(1)


As of
Aug 31, 2020(1)

Net Book Value of Flight Equipment ($ mils.)

$

6,761


$


7,121


Net Book Value of Unencumbered Flight Equipment ($ mils.)

$

5,593


$


5,578


Number of Aircraft

255



273


Number of Unencumbered Aircraft

223



237


Number of Lessees

76



80


Number of Countries

42



45


Weighted Average Fleet Age (years)(2)

10.6



10.5


Weighted Average Remaining Lease Term (years)(2)

4.6



4.2


Weighted Average Fleet Utilization for the quarter ended(3)

94.1

%


93.6

%

Weighted Average Fleet Utilization for the six months ended(3)

93.6

%


95.1

%





Managed Aircraft on behalf of Joint Ventures




Net Book Value of Flight Equipment ($ mils.)

$

305


$


319


Number of Aircraft

9



9



(1)

Calculated using net book value at period end.

(2)

Weighted by net book value.

(3)

Aircraft on-lease days as a percent of total days in period weighted by net book value. The decrease from our historical utilization rate for the three months ended August 31, 2021, and 2020, was primarily due to off-lease aircraft as a result of early lease terminations and scheduled lease expirations.

Deferrals

Even as the airline industry recovers, airlines continue to seek support from their respective governments, raise debt and equity, delay or cancel new aircraft orders and request concessions from lessors. As of October 8, 2021, six of our airline customers were subject to judicial insolvency proceedings or similar protection. We lease 22 aircraft to these customers, which comprise 13% of our net book value of flight equipment and 10% of our reported lease rental and direct financing and sales-type lease revenues for the twelve months ended August 31, 2021. Of these 22 aircraft, thirteen are on lease with LATAM for which we have signed restructured leases, subject only to LATAM emerging from the Chapter 11 process. 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 COVID-19 crisis.

As of October 8, 2021, our total deferrals, net of repayments, were $101.8 million. These deferrals have been agreed with twenty airlines, representing 26% of our customer base. Of the total deferrals, $89.8 million is included in our August 31, 2021, Consolidated Balance Sheet with the balance representing future lease payments. Approximately 77% of our total deferrals as of October 8, 2021, have been agreed to as part of broader lease restructurings, which generally include term extensions, better security packages or other valuable consideration in exchange for near-term economic concessions and have repayment terms that extend beyond twelve months. Deferrals represented approximately 18% of our reported lease rental and direct financing and sales-type lease revenues for the twelve months ended August 31, 2021.

We hold $518.3 million of maintenance reserves and $77.1 million of security deposits, as well as an additional $143.3 million in letters of credit from our lessees. These combined reserves total $738.7 million, represent 11% of NBV, and provide significant protection against potential future airline failures and the unscheduled return of additional aircraft.

Preference Share Issuance

In early June we issued $400 million of preference shares with a dividend of 5.25%. The original proposed amount for this capital raise was $300 million at targeted dividend of 5.625%. Due to strong demand, the transaction was upsized with the lower dividend. The issue has a perpetual term and receives 50% equity credit treatment from Moody's, S&P and Fitch Ratings, in line with their respective rating methodologies. At the time of issuance, Aircastle's outlook was upgraded to Stable by Moody's.

Conference Call

In connection with this press release, management will host a conference call on Wednesday, Oct 13, 2021, 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 (800) 437-2398 (from within the U.S. and Canada) or (786) 204-3966 (from outside of the U.S. and Canada) ten minutes prior to the scheduled start and referencing the passcode "2526167".

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 Friday, October 15, 2021, 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 "2526167".

About Aircastle Limited

Aircastle Limited acquires, leases, and sells commercial jet aircraft to airlines throughout the world. As of August 31, 2021, Aircastle owned and managed on behalf of its joint ventures 264 aircraft leased to 76 customers located in 42 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.

Aircastle Limited and Subsidiaries

Consolidated Balance Sheets

(Dollars in thousands, except share data)



August 31,
2021


February 28,
2021





ASSETS




Cash and cash equivalents

$

337,455



$

578,004


Restricted cash and cash equivalents

2,740



2,594


Accounts receivable

80,877



82,572


Flight equipment held for lease, net of accumulated depreciation of $2,253,085 and $2,076,972, respectively

6,573,891



6,492,471


Net investment in leases, net of allowance for credit losses of $876 and $864, respectively

187,299



195,376


Unconsolidated equity method investments

36,122



35,377


Other assets

326,575



311,944


Total assets

$

7,544,959



$

7,698,338






LIABILITIES AND SHAREHOLDERS' EQUITY




LIABILITIES




Borrowings from secured financings, net of debt issuance costs and discounts

$

723,054



$

768,850


Borrowings from unsecured financings, net of debt issuance costs and discounts

3,869,574



4,366,261


Accounts payable, accrued expenses and other liabilities

180,422



174,267


Lease rentals received in advance

57,692



58,013


Security deposits

77,104



80,699


Maintenance payments

518,289



519,178


Total liabilities

5,426,135



5,967,268






Commitments and Contingencies








SHAREHOLDERS' EQUITY




Preference shares, $0.01 par value, 50,000,000 shares authorized, 400 (aggregate liquidation preference of $400,000) shares issued and outstanding at August 31, 2021 and no shares issued and outstanding at February 28, 2021




Common shares, $0.01 par value, 250,000,000 shares authorized, 14,048 shares issued and outstanding at August 31, 2021 and February 28, 2021




Additional paid-in capital

1,879,139



1,485,777


Retained earnings

239,685



245,293


Total shareholders' equity

2,118,824



1,731,070


Total liabilities and shareholders' equity

$

7,544,959



$

7,698,338


Aircastle Limited and Subsidiaries

Consolidated Statements of Income (Loss)

(Dollars in thousands)



Three Months Ended
August 31,


Six Months Ended

August 31,


2021


2020


2021


2020

Revenues:








Lease rental revenue

$

137,589



$

150,895



$

269,714



$

334,073


Direct financing and sales-type lease revenue

2,776



4,747



5,653



10,064


Amortization of lease premiums, discounts and incentives

(5,835)



(4,629)



(11,159)



(11,975)


Maintenance revenue

21,218



20,034



47,694



96,665


Total lease revenue

155,748



171,047



311,902



428,827


Gain (loss) on sale of flight equipment

1,502



(848)



10,524



11,230


Other revenue

402



1,123



1,036



13,793


Total revenues

157,652



171,322



323,462



453,850










Operating expenses:








Depreciation

83,391



86,749



165,782



175,961


Interest, net

55,413



55,324



113,450



114,050


Selling, general and administrative (including non-cash share-based payment expense of $0 and $0 for the three months ended, and $0 and $28,049 for the six months ended August 31, 2021 and 2020, respectively)

15,996



13,555



31,585



61,006


Impairment of flight equipment

21,232



212,387



41,815



289,685


Maintenance and other costs

8,087



4,271



15,615



9,837


Total operating expenses

184,119



372,286



368,247



650,539










Other income (expense):








Loss on extinguishment of debt

(14,132)



(57)



(14,156)



(65)


Merger expenses



27





(32,042)


Other

57,609



(173)



57,619



(192)


Total other income (expense)

43,477



(203)



43,463



(32,299)










Income (loss) from continuing operations before income taxes and earnings of unconsolidated equity method investments

17,010



(201,167)



(1,322)



(228,988)


Income tax provision (benefit)

7,665



13,020



(627)



12,469


Earnings of unconsolidated equity method investments, net of tax

458



674



745



1,405


Net income (loss)

$

9,803



$

(213,513)



$

50



$

(240,052)


Preference share dividends

(5,658)





(5,658)




Net income (loss) available to common shareholders

$

4,145



$

(213,513)



$

(5,608)



$

(240,052)


Total comprehensive income (loss) available to common shareholders

$

4,145



$

(213,513)



$

(5,608)



$

(240,052)


Aircastle Limited and Subsidiaries

Consolidated Statements of Cash Flows

(Dollars in thousands)



Six Months Ended August 31,


2021


2020

Cash flows from operating activities:




Net income (loss)

$

50



$

(240,052)


Adjustments to reconcile net income (loss) to net cash and restricted cash provided by operating activities:




Depreciation

165,782



175,961


Amortization of deferred financing costs

8,384



6,713


Amortization of lease premiums, discounts and incentives

11,159



11,975


Deferred income taxes

4,240



4,374


Non-cash share-based payment expense



28,049


Collections on net investment in leases

8,065



8,670


Security deposits and maintenance payments included in earnings

(30,420)



(102,523)


Gain on sale of flight equipment

(10,524)



(11,230)


Loss on extinguishment of debt

14,156



65


Impairment of flight equipment

41,815



289,685


Provision for credit losses

12



4,513


Other

(745)



(1,386)


Changes in certain assets and liabilities:




Accounts receivable

(5,479)



(45,747)


Other assets

(15,413)



(57,441)


Accounts payable, accrued expenses and other liabilities

(10,664)



(3,723)


Lease rentals received in advance

(704)



(42,311)


Net cash and restricted cash provided by operating activities

179,714



25,592


Cash flows from investing activities:




Acquisition and improvement of flight equipment

(370,187)



(33,643)


Proceeds from sale of flight equipment

77,900



53,229


Aircraft purchase deposits and progress payments, net of deposits returned and aircraft sales deposits

10,003



(3,463)


Other

(64)



(594)


Net cash and restricted cash (used in) provided by investing activities

(282,348)



15,529


Cash flows from financing activities:




Repurchase of shares



(25,536)


Parent contribution at Merger



25,536


Net proceeds from preference share issuance

393,362




Proceeds from secured and unsecured debt financings



1,193,871


Repayments of secured and unsecured debt financings

(546,903)



(851,404)


Debt extinguishment costs

(13,372)



(65)


Deferred financing costs

(4,748)



(5,508)


Security deposits and maintenance payments received

44,111



33,553


Security deposits and maintenance payments returned

(10,219)



(38,710)


Dividends paid



(24,025)


Net cash and restricted cash (used in) provided by financing activities

(137,769)



307,712


Net (decrease) increase in cash and restricted cash:

(240,403)



348,833


Cash and restricted cash at beginning of period

580,598



171,437






Cash and restricted cash at end of period

$

340,195



$

520,270


Aircastle Limited and Subsidiaries

Reconciliation of GAAP to non-GAAP Measures

EBITDA and Adjusted EBITDA Reconciliation

(Dollars in thousands)



Three Months Ended August 31,


Six Months Ended August 31,


2021


2020


2021


2020



Net income (loss)

$

9,803



$

(213,513)



$

50



$

(240,052)


Depreciation

83,391



86,749



165,782



175,961


Amortization of lease premiums, discounts and incentives

5,835



4,629



11,159



11,975


Interest, net

55,413



55,324



113,450



114,050


Income tax provision (benefit)

7,665



13,020



(627)



12,469


EBITDA

162,107



(53,791)



289,814



74,403


Adjustments:








Impairment of flight equipment

21,232



212,387



41,815



289,685


Loss on extinguishment of debt

14,132



57



14,156



65


Non-cash share-based payment expense







28,049


Merger related expenses(1)



(27)





34,601


Loss on mark-to-market of interest rate derivative contracts



2





19


Contract termination expense



172





172










Adjusted EBITDA

$

197,471



$

158,800



$

345,785



$

426,994


(1)

Included $32.1 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.

Contact:

Aircastle Advisor LLC

Jim Connelly, SVP ESG & Corporate Communications

Tel: +1-203-504-1871

jconnelly@aircastle.com

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SOURCE Aircastle Limited

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