Leasing specialists Aircastle Limited reported its third quarter 2018 results this week which demonstrated the company had a net income of $36.3 million and adjusted net income of $38.2 million. The third quarter results included total lease rental and finance and sales-type lease revenues of $190.8 million, an increase of 7.2%, versus $178.1 million in the third quarter of 2017.
Third Quarter 2018 Highlights
Aircastle now has investment grade credit ratings from all three major credit rating agencies; Upgraded to investment grade by Moody's Investors Service in AugustIssued our first investment grade senior unsecured note for $650 million due 2023, bearing a coupon of 4.40%Acquired eight narrow-body aircraft for $262.4 million, including two A320neosClosed or expect to close fifteen additional narrow-body aircraft in the fourth quarter of 2018 for $674.3 millionSold three aircraft in the third quarter, including one 777-300ER, and recorded gains on sale of $3.0 millionDeclared our 50th consecutive quarterly dividend and increased the dividend to $0.30 from $0.28, or 7.1%; This is our ninth dividend increase in eight yearsRepurchased $53.7 million of our shares year-to-date at average price of $20.22 per share; Repurchase authorisation increased by $58 million, to $100 million
Commenting on the results, Mike Inglese, Aircastle's Chief Executive Officer, stated, "We remain confident in our business model as the leading investor in the secondary aircraft market with a best-in-class asset management platform, and have increased our dividend for the ninth time in eight years. Now with an investment grade credit rating from all three major rating agencies, we can capitalise on growth opportunities with access to attractively priced capital. We are pleased to have recently issued our first investment grade note on very attractive terms."
Mr. Inglese concluded, "We are also pleased to announce that our Board approved an increase in Aircastle's share repurchase program to $100 million, from the $42 million that was remaining under the prior authorisation. With our strong balance sheet, shareholder-friendly capital allocation policy, and the unique ability to source attractive, value-added transactions, we are positioned to increase value in the current market environment, and will continue to grow profitably and opportunistically well into the future."
Aviation Assets
During the third quarter, we acquired eight aircraft for $262.4 million, including two new A320neos, our first investment in new technology aircraft. For the first nine months of 2018, we purchased 21 aircraft for $674.8 million. The aircraft we've acquired year-to-date had a weighted average age of 7.4 years and a weighted average remaining lease term of 5.5 years. For the full year, we expect to complete $1.35 billion in aircraft acquisitions, including eight additional A320neos.
During the third quarter of 2018, we sold three aircraft, including one 777-300ER, for total sales proceeds of $98.0 million.
Year-to-date, we sold eleven aircraft for proceeds of $276.2 million and a net gain on sale of $28.6 million. The average age of the aircraft sold was 12.9 years with an average remaining lease term of 4.2 years.
Our fleet utilisation during the third quarter was 100%. As of September 30, 2018, Aircastle owned 234 aircraft having a net book value of $6.8 billion. We also manage twelve aircraft with a net book value of $621.1 million dollars on behalf of our joint ventures.
As of September 30, 2018, Aircastle owned and managed 246 aircraft with a net book value of $7.5 billion.
Owned Aircraft
|
As of
September 30,
2018(1)
|
As of
September 30,
2017(1)
|
|||||
Net Book Value of Flight Equipment ($ mils.)
|
$
|
6,839
|
$
|
5,979
|
|||
Net Book Value of Unencumbered Flight Equipment ($ mils.)
|
$
|
5,606
|
$
|
4,572
|
|||
Number of Aircraft
|
234
|
192
|
|||||
Number of Unencumbered Aircraft
|
207
|
163
|
|||||
Weighted Average Fleet Age (years)(2)
|
9.6
|
8.7
|
|||||
Weighted Average Remaining Lease Term (years)(2)
|
4.5
|
4.7
|
|||||
Weighted Average Fleet Utilisation for the quarter ended(3)
|
100.0
|
%
|
100.0
|
%
|
|||
Portfolio Yield for the quarter ended(2)(4)
|
11.8
|
%
|
12.3
|
%
|
|||
Net Cash Interest Margin(5)
|
8.6
|
%
|
8.8
|
%
|
|||
Managed Aircraft on behalf of Joint Ventures
|
|||||||
Net Book Value of Flight Equipment ($ mils.)
|
$
|
621
|
$
|
661
|
|||
Number of Aircraft
|
12
|
13
|
|||||
