Summary
- Air Lease Corporation (ALC) reported a 21% increase in revenue for 2Q23, boosted by the sale of eight aircraft.
- ALC owns a significant slice of the world’s industrial fleet, with a net book value of $25.5 billion, and has a powerful customer base with 118 airlines in 63 countries.
- ALC’s fleet consists of a combination of Airbus and Boeing aircraft, with a concentrate on new-generation planes. The corporate has already placed 100% of its aircraft deliveries through 2024 and has placed 58% of its total aircraft order book.
While airlines are quickly recovering to pre-pandemic levels it’ll take years, if not a long time, for his or her balance sheets to return to full health. Pre-COVID aircraft lessors owned a little bit over 50% of the world’s industrial fleet, but that rose to around 66% throughout the middle of the crisis.
Selling aircraft is sweet business
Last week certainly one of the world’s leading aircraft lessors, US-based Air Lease Corporation, reported a 21% increase in revenue for the second quarter in comparison with the previous 12 months. For the three months ending June 30, 2023 (2Q23), Air Lease Corporation (ALC) generated revenue of $672.9 million, in comparison with $557.7 in 2Q last 12 months. On a year-to-date basis, ALC reported revenue of 1.3 billion in the primary half, an 13% increase over the $1.15 billion in the primary six months of 2022.
Photo: Boeing
Net income in 2Q23 was $122 million and for the primary half $240.3 million, in comparison with $106 million and a lack of $374 million, respectively, in 2022. Second quarter income was boosted by the sale of eight aircraft with a carrying value of $600 million, returning a profit of $45 million. Within the August 3 announcement, Executive Chairman Steven F. Udar-Házy and CEO and President John Plueger said:
“Our second quarter results benefited from latest aircraft deliveries exceeding our expectations, coupled with gains from higher volumes of aircraft sales. Lease rates proceed to strengthen and demand for each aircraft leasing and sales remain robust, which we see as continuing for the foreseeable future.”
An enormous customer for Airbus and Boeing
ALC received 19 aircraft in 2Q23 and ended the quarter with an owned fleet of 448 aircraft with a net book value of $25.5 billion out of total assets of roughly $30 billion. ALC’s fleet includes 332 narrowbody and 116 widebody, plus 80 managed aircraft, with a median fleet age of 4.5 years. The corporate’s aircraft are utilized by 118 airlines in 63 countries and, at the tip of June, had a weighted average remaining lease term of seven.2 years.
Photo: Boeing
The owned fleet incorporates 232 Airbus, 215 Boeing and one Embraer aircraft, and there are an additional 359 jets on order. Recent generation aircraft feature strongly in the present fleet, with 24 Airbus A320neos and 89 A321neos and 51 Boeing 737-8 MAXs, and 25 737-9 MAXs out on lease. The fleet also includes 20 A330neos, 22 A350s and 31 787s, while 19 aircraft are classified as being held on the market.
Illustrating the strength of the leasing market is that 100% of aircraft being delivered to ALC through to the tip of 2024 have already been placed. Looking further ahead, ALC has commitments for 58% of its total aircraft order book. In an earnings call, Pleuger said that ALC was being prudent and patient in its order book placements as lease rates proceed their upward momentum.
Adding a note of caution, he said that Boeing had advised of more delays to MAX deliveries and that the lessor was fastidiously following the news on the GTF (geared turbofan) engine issues at Pratt & Whitney. Although only eight engines out of ALC’s fleet are affected by the GTF issue, Plueger expects that increased groundings will result in more aircraft demand opportunities over the near and medium term.