Air Lease Corporation (ALC) (NYSE: AL) announces financial results for the three months ended March 31, 2024.
With aircraft in short supply and values rising, we benefit from continued fleet expansion and sales activity in an industry backdrop that remains positive. We see this environment continuing for the near to medium term future,” said John L. Plueger, Chief Executive Officer and President, and Steven F. Udvar-Házy, Executive Chairman of the Board.
First Quarter 2024 Results
The following table summarizes our operating results for the three months ended March 31, 2024 and 2023 (in millions, except per share amounts and percentages):
Operating Results
| Three Months EndedMarch 31, | ||||||||||||||
| 2024 | 2023 | $ change | % change | |||||||||||
| Revenues | $ | 663.3 | $ | 636.1 | $ | 27.2 | 4.3 | % | ||||||
| Operating expenses | (528.0 | ) | (477.9 | ) | (50.1 | ) | 10.5 | % | ||||||
| Income before taxes | 135.3 | 158.3 | (23.0 | ) | (14.5 | )% | ||||||||
| Net income attributable to common stockholders | $ | 97.4 | $ | 118.3 | $ | (20.9 | ) | (17.7 | )% | |||||
| Diluted earnings per share | $ | 0.87 | $ | 1.06 | $ | (0.19 | ) | (17.9 | )% | |||||
| Adjusted net income before income taxes(1) | $ | 146.3 | $ | 166.8 | $ | (20.5 | ) | (12.3 | )% | |||||
| Adjusted diluted earnings per share before income taxes(1) | $ | 1.31 | $ | 1.50 | $ | (0.19 | ) | (12.7 | )% | |||||
Key Financial Ratios
| Three Months EndedMarch 31, | |||||
| 2024 | 2023 | ||||
| Pre-tax margin | 20.4 | % | 24.9 | % | |
| Adjusted pre-tax margin(1) | 22.1 | % | 26.2 | % | |
| Pre-tax return on common equity (trailing twelve months) | 11.2 | % | 10.2 | % | |
| Adjusted pre-tax return on common equity (trailing twelve months)(1) | 11.6 | % | 11.0 | % | |
| (1) | Adjusted net income before income taxes, adjusted diluted earnings per share before income taxes, adjusted pre-tax margin and adjusted pre-tax return on common equity have been adjusted to exclude the effects of certain non-cash items, one-time or non-recurring items that are not expected to continue in the future and certain other items. See note 1 under the Consolidated Statements of Operations included in this earnings release for a discussion of the non-GAAP measures and a reconciliation to their most comparable GAAP financial measures. |
Highlights
- During the first quarter, we took delivery of 14 aircraft from our order book, representing approximately $900 million in aircraft investments, ending the period with 472 aircraft in our owned fleet and approximately $31 billion in total assets.
- Sold five aircraft during the first quarter for approximately $240 million in sales proceeds.
- We have approximately $1.4 billion of aircraft in our sales pipeline in 2024, which includes $666 million in flight equipment held for sale as of March 31, 2024 and $698 million of aircraft subject to letters of intent.
- We have placed 100% of our committed orderbook on long-term leases for aircraft delivering through the end of 2025 and have placed approximately 63% of our entire orderbook delivering through 2029.
- We ended the quarter with $30.6 billion in committed minimum future rental payments consisting of $16.6 billion in contracted minimum rental payments on the aircraft in our existing fleet and $14.0 billion in minimum future rental payments related to aircraft which will deliver between 2024 through 2028.
- During the first quarter, we issued approximately $1.4 billion in aggregate principal amount of Medium-Term Notes across three different markets (US, Canada and Europe) with a swap-adjusted average rate of 5.43% with maturities ranging from 2028 to 2030.
- In April 2024, with the support of 52 financial institutions, we increased the capacity of our syndicated unsecured revolving credit facility to $7.8 billion and extended the final maturity to May 5, 2028.
- On May 3, 2024, our board of directors declared a quarterly cash dividend of $0.21 per share on our outstanding Class A common stock. The next quarterly dividend of $0.21 per share will be paid on July 8, 2024 to holders of record of our Class A common stock as of June 4, 2024.
Financial Overview
Our total revenues for the three months ended March 31, 2024 increased by 4% to $663 million as compared to the three months ended March 31, 2023. The increase in total revenues was primarily driven by the continued growth in our fleet and an increase in sales activity partially offset by a decrease in end of lease revenue. During the three months ended March 31, 2024, we recognized $23.0 million in gains from the sale of five aircraft and $12.7 million in end of lease revenue from the return of two aircraft. During the first quarter of 2023, we recognized $8.8 million from the sale of two aircraft and $34.7 million in end of lease revenue from the return of 10 aircraft.
Our net income attributable to common stockholders for the three months ended March 31, 2024 was $97 million, or $0.87 per diluted share, compared to $118 million, or $1.06 per diluted share, for the three months ended March 31, 2023. The decrease from the prior year period is primarily due to higher interest expense driven by the increase in our composite cost of funds, partially offset by the increase in revenues discussed above.
Adjusted net income before income taxes during the three months ended March 31, 2024 was $146 million, or $1.31 per adjusted diluted share, as compared to $167 million, or $1.50 per adjusted diluted share, for the three months ended March 31, 2023. Adjusted net income before income taxes decreased primarily due to higher interest expense driven by the increase in our composite cost of funds, partially offset by the increase in revenues discussed above.
Flight Equipment Portfolio
As of March 31, 2024, the net book value of our fleet increased to $26.5 billion, compared to $26.2 billion as of December 31, 2023. As of March 31, 2024, we owned 472 aircraft in our aircraft portfolio, comprised of 354 narrowbody aircraft and 118 widebody aircraft, and we managed 73 aircraft. The weighted average fleet age and weighted average remaining lease term of flight equipment subject to operating lease as of March 31, 2024 was 4.7 years and 7.0 years, respectively. We had a globally diversified customer base comprised of 120 airlines in 62 countries as of March 31, 2024.
The following table summarizes the key portfolio metrics of our fleet as of March 31, 2024 and December 31, 2023:
| March 31, 2024 | December 31, 2023 | ||||||
| Net book value of flight equipment subject to operating lease | $ | 26.5 billion | $ | 26.2 billion | |||
| Weighted-average fleet age(1) | 4.7 years | 4.6 years | |||||
| Weighted-average remaining lease term(1) | 7.0 years | 7.0 years | |||||
| Owned fleet(2) | 472 | 463 | |||||
| Managed fleet | 73 | 78 | |||||
| Aircraft on order | 320 | 334 | |||||
| Total | 865 | 875 | |||||
| Current fleet contracted rentals | $ | 16.6 billion | $ | 16.4 billion | |||
| Committed fleet rentals | $ | 14.0 billion | $ | 14.6 billion | |||
| Total committed rentals | $ | 30.6 billion | $ | 31.0 billion | |||
| (1) | Weighted-average fleet age and remaining lease term calculated based on net book value of our flight equipment subject to operating lease. | |
| (2) | As of March 31, 2024 and December 31, 2023, our owned fleet count included 17 and 14 aircraft classified as flight equipment held for sale and 13 and 12 aircraft classified as net investments in sales-type leases, respectively, which are all included in Other assets on the Consolidated Balance Sheet. |
The following table details the regional concentration of our flight equipment subject to operating leases:
| March 31, 2024 | December 31, 2023 | |||||
| Region | % of Net Book Value | % of Net Book Value | ||||
| Europe | 39.0 | % | 37.7 | % | ||
| Asia Pacific | 38.4 | % | 39.8 | % | ||
| Central America, South America, and Mexico | 9.0 | % | 9.0 | % | ||
| The Middle East and Africa | 7.7 | % | 7.9 | % | ||
| U.S. and Canada | 5.9 | % | 5.6 | % | ||
| Total | 100.0 | % | 100.0 | % | ||
The following table details the composition of our owned fleet by aircraft type:
| March 31, 2024 | December 31, 2023 | |||||||||||
| Aircraft type | Number ofAircraft | % of Total | Number ofAircraft | % of Total | ||||||||
| Airbus A220-100 | 3 | 0.6 | % | 2 | 0.4 | % | ||||||
| Airbus A220-300 | 14 | 3.0 | % | 13 | 2.8 | % | ||||||
| Airbus A319-100 | 1 | 0.2 | % | 1 | 0.2 | % | ||||||
| Airbus A320-200 | 28 | 5.9 | % | 28 | 6.0 | % | ||||||
| Airbus A320-200neo | 26 | 5.5 | % | 25 | 5.4 | % | ||||||
| Airbus A321-200 | 23 | 4.9 | % | 23 | 5.0 | % | ||||||
| Airbus A321-200neo | 100 | 21.2 | % | 95 | 20.6 | % | ||||||
| Airbus A330-200(1) | 13 | 2.8 | % | 13 | 2.8 | % | ||||||
| Airbus A330-300 | 5 | 1.1 | % | 5 | 1.1 | % | ||||||
| Airbus A330-900neo | 22 | 4.7 | % | 23 | 5.0 | % | ||||||
| Airbus A350-900 | 14 | 3.0 | % | 14 | 3.0 | % | ||||||
| Airbus A350-1000 | 8 | 1.7 | % | 7 | 1.5 | % | ||||||
| Boeing 737-700 | 3 | 0.6 | % | 3 | 0.6 | % | ||||||
| Boeing 737-800 | 71 | 15.0 | % | 73 | 15.8 | % | ||||||
| Boeing 737-8 MAX | 55 | 11.7 | % | 52 | 11.2 | % | ||||||
| Boeing 737-9 MAX | 29 | 6.1 | % | 29 | 6.3 | % | ||||||
| Boeing 777-200ER | 1 | 0.2 | % | 1 | 0.2 | % | ||||||
| Boeing 777-300ER | 24 | 5.1 | % | 24 | 5.2 | % | ||||||
| Boeing 787-9 | 25 | 5.3 | % | 25 | 5.4 | % | ||||||
| Boeing 787-10 | 6 | 1.2 | % | 6 | 1.3 | % | ||||||
| Embraer E190 | 1 | 0.2 | % | 1 | 0.2 | % | ||||||
| Total(2) | 472 | 100.0 | % | 463 | 100.0 | % | ||||||
| (1) | As of March 31, 2024 and December 31, 2023, aircraft count includes two Airbus A330-200 aircraft classified as freighters. | |
| (2) | As of March 31, 2024 and December 31, 2023, our owned fleet count included 17 and 14 aircraft classified as flight equipment held for sale and 13 and 12 aircraft classified as net investments in sales-type leases, respectively, which are all included in Other assets on the Consolidated Balance Sheet. |
Debt Financing Activities
We ended the first quarter of 2024 with total debt financing, net of discounts and issuance costs, of $19.5 billion. As of March 31, 2024, 83.3% of our total debt financing was at a fixed rate and 98.5% was unsecured. As of March 31, 2024, our composite cost of funds was 4.03%. We ended the quarter with total liquidity of $6.5 billion.
As of the end of the periods presented, our debt portfolio was comprised of the following components (dollars in millions, except percentages):
| March 31, 2024 | December 31, 2023 | ||||||
| Unsecured | |||||||
| Senior unsecured securities | $ | 16,308 | $ | 16,330 | |||
| Term financings | 1,608 | 1,628 | |||||
| Revolving credit facility | 1,453 | 1,100 | |||||
| Total unsecured debt financing | 19,369 | 19,058 | |||||
| Secured | |||||||
| Export credit financing | 202 | 205 | |||||
| Term financings | 97 | 101 | |||||
| Total secured debt financing | 299 | 306 | |||||
| Total debt financing | 19,668 | 19,364 | |||||
| Less: Debt discounts and issuance costs | (188 | ) | (181 | ) | |||
| Debt financing, net of discounts and issuance costs | $ | 19,480 | $ | 19,183 | |||
| Selected interest rates and ratios: | |||||||
| Composite interest rate(1) | 4.03 | % | 3.77 | % | |||
| Composite interest rate on fixed-rate debt(1) | 3.51 | % | 3.26 | % | |||
| Percentage of total debt at a fixed-rate | 83.27 | % | 84.71 | % | |||