Fly Leasing Limited, a global leader in aircraft leasing has released its financial results for the first quarter of 2021.
Signed merger agreement to be acquired by Carlyle Aviation for $17.05 per shareTotal revenues of $80.9 millionNet loss of $3.4 million, $0.11 per shareUnrestricted cash and cash equivalents of $117.2 million$157 million net book value of unencumbered assets
"The pending acquisition of FLY by an affiliate of Carlyle Aviation Partners is on track and is expected to close in the third quarter," said Colm Barrington, CEO of FLY. "We believe that this transaction represents strong value for FLY shareholders with the per share cash consideration representing a premium of nearly 30% to FLY's closing price on March 26, 2021, the last trading day prior to the merger announcement."
"In the quarter, FLY's revenues and net income were again adversely impacted by the global pandemic," added Barrington. "While we are seeing improvements in some sectors of the global airline industry, particularly in U.S. and Chinese domestic traffic, there are still large parts of the world where COVID-19 is surging and both domestic and international air traffic is at a virtual standstill due to continuing travel restrictions. It now appears likely that it will be well into 2022 before global air traffic returns towards 2019 levels."
Financial Results
FLY is reporting a net loss of $3.4 million, or $0.11 per share, for the first quarter of 2021. This compares to net income of $38.1 million, or $1.24 per share, for the same period in 2020. During the first quarter of 2021, FLY recognized $5.9 million of costs associated with the pending transaction with Carlyle Aviation (see below under "Merger").
Adjusted Net Income (Loss)
Adjusted Net Loss was $1.4 million for the first quarter of 2021, compared to Adjusted Net Income of $43.6 million for the same period in the previous year. On a per share basis, Adjusted Net Loss was $0.04 in the first quarter of 2021, compared to Adjusted Net Income of $1.42 for the first quarter of 2020.
A reconciliation of Adjusted Net Income to net income determined in accordance with GAAP is shown below.
Financial Position
At March 31, 2021, FLY's total assets were $3.1 billion, including investment in flight equipment totaling $2.8 billion. Total cash at March 31, 2021 was $151.2 million, of which $117.2 million was unrestricted. At March 31, 2021, FLY's net debt to equity ratio was 2.2x, reduced from 2.3x as of December 31, 2020.
Merger
FLY announced on March 29, 2021 that it had entered into a definitive agreement to be acquired by an affiliate of Carlyle Aviation Partners ("Carlyle Aviation"), the commercial aviation investment and servicing arm within The Carlyle Group's $56 billion Global Credit platform. Under the terms of the Merger Agreement, FLY shareholders will receive $17.05 per share in cash, representing a total equity valuation of approximately $520 million. The total enterprise value of the transaction is approximately $2.36 billion. The transaction is expected to close in the third quarter of 2021 and is subject to customary closing conditions, including applicable regulatory clearance and the approval of FLY's shareholders. Given the pending transaction, FLY will not host a first quarter earnings call.
Aircraft Portfolio
At March 31, 2021, FLY had 84 aircraft and seven engines in its portfolio. FLY's aircraft and engines are on lease to 36 airlines in 22 countries. The table below does not include the engines.
Portfolio at | Mar. 31, 2021 | Dec. 31, 2020 | ||
Number | % of Net Book | Number | % of Net Book | |
Airbus A320ceo Family | 32 | 28% | 32 | 28% |
Airbus A320neo Family | 1 | 2% | 1 | 2% |
Airbus A330 | 3 | 2% | 3 | 2% |
Boeing 737NG | 40 | 39% | 40 | 39% |
Boeing 737 MAX | 2 | 3% | 2 | 3% |
Boeing 777-LRF | 2 | 11% | 2 | 11% |
Boeing 787 | 4 | 15% | 4 | 15% |
Total(1) | 84 | 100% | 84 | 100% |
(1) Includes six aircraft classified as held for sale as of March 31, 2021. No aircraft were classified as held for sale as of December 31, 2020. | ||||
At March 31, 2021, the average age of the portfolio, weighted by net book value of each aircraft and engine, was 8.6 years. The average remaining lease term was 4.7 years, also weighted by net book value.
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