Air Lease Corporation Announces Second Quarter 2023 Results

Air Lease Corporation announces financial results for the three and six months ended June 30, 2023.

“Our second quarter results benefited from new aircraft deliveries exceeding our expectations, coupled with gains from higher volumes of aircraft sales. Lease rates continue to strengthen and demand for both aircraft leasing and sales remain robust, which we see continuing for the foreseeable future,” said John L. Plueger, Chief Executive Officer and President, and Steven F. Udvar-Házy, Executive Chairman of the Board.

Second Quarter 2023 Results

The following table summarizes our operating results for the three and six months ended June 30, 2023 and 2022 (in millions, except per share amounts and percentages.

Operating Results

	Three Months Ended June 30,															Six Months Ended June 30,
		2023				2022			$ change				% change				2023				2022			$ change				% change
Revenues	$	672.9			$	557.7			$	115.2			20.7	%		$	1,309.0			$	1,154.4			$	154.6			13.4	%
Operating expenses		(509.0	)			(412.8	)			(96.2	)		23.3	%			(986.8	)			(808.8	)			(178.0	)		22.0	%
Write-off of Russian fleet		—				—				—			—	%			—				(802.4	)			802.4			—	%
Income/(loss) before taxes		164.0				144.9				19.1			13.2	%			322.2				(456.8	)			779.0			—	%
Net income/(loss) attributable to common stockholders	$	122.0			$	105.9			$	16.1			15.2	%		$	240.3			$	(373.6	)		$	613.9			—	%
Diluted earnings/(loss) per share	$	1.10			$	0.95			$	0.15			15.8	%		$	2.16			$	(3.32	)		$	5.48			—	%
Adjusted net income before income taxes(1)	$	175.9			$	154.5			$	21.4			13.9	%		$	342.7			$	355.4			$	(12.7	)		(3.6	)%
Adjusted diluted earnings per share before income taxes(1)	$	1.58			$	1.39			$	0.19			13.7	%		$	3.08			$	3.15			$	(0.07	)		(2.2	)%

Key Financial Ratios

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Pre-tax margin	24.4%		26.0%		24.6%		(39.6)%
Adjusted pre-tax margin(1)	26.1%		27.7%		26.2%		30.8%
Pre-tax return on common equity (trailing twelve months)	10.3%		(3.0)%		10.3%		(3.0)%
Adjusted pre-tax return on common equity (trailing twelve months)(1)	11.2%		12.2%		11.2%		12.2%
(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, such as write-offs of our Russian fleet, 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

Took delivery of 19 aircraft from our orderbook, representing approximately $1.5 billion in aircraft investments, ending the period with approximately $30 billion in total assets.

Sold eight aircraft with a carrying value of approximately $600 million during the quarter, resulting in $45 million in gains from aircraft sales.

As of August 3, 2023, we had aircraft with a carrying value of approximately $1.7 billion in our sales pipeline, which includes the 19 aircraft with a carrying value of $900 million classified as flight equipment held for sale as of June 30, 2023 and 22 aircraft with a carrying value of $800 million subject to letters of intent.

Placed 100% of our contracted orderbook positions on long-term leases for aircraft delivering through the end of 2024 and have placed 58% of our entire orderbook.

Ended the quarter with $29.6 billion in committed minimum future rental payments consisting of $16.2 billion in contracted minimum rental payments on the aircraft in our existing fleet and $13.4 billion in minimum future rental payments related to aircraft on order.

During the quarter, we entered into approximately $900 million in new financings. We ended the quarter with liquidity of $7.6 billion.

On August 2, 2023, our board of directors declared a quarterly cash dividend of $0.20 per share on our outstanding common stock. The next quarterly dividend of $0.20 per share will be paid on October 6, 2023 to holders of record of our common stock as of September 12, 2023.

Financial Overview

Our total revenues for the three months ended June 30, 2023 increased by 21% to $672.9 million as compared to the three months ended June 30, 2022. The increase in total revenues was primarily driven by the continued growth in our fleet and an increase in sales activity. The increase in aircraft sales, trading and other revenue was primarily related to the sale of eight aircraft which generated approximately $45 million in gains. We did not sell any aircraft for the three months ended June 30, 2022.

Our net income attributable to common stockholders for the three months ended June 30, 2023 was $122.0 million, or $1.10 per diluted share, compared to net income attributable to common stockholders of $105.9 million, or $0.95 per diluted share, for the three months ended June 30, 2022. Our adjusted net income before income taxes during the three months ended June 30, 2023 was $175.9 million or $1.58 per adjusted diluted share, as compared to $154.5 million, or $1.39 per adjusted diluted share, for the three months ended June 30, 2022. Net income attributable to common stockholders and adjusted net income before income taxes increased from the prior year period due to the growth of our fleet and increase in sales activity, partially offset by an increase in interest expense due to the increases in our composite cost of funds, increase in aircraft transition costs and increases in our aviation insurance expense in line with the growth of our fleet in the current year period.

Flight Equipment Portfolio

As of June 30, 2023, the net book value of our fleet increased to $25.5 billion, compared to $24.5 billion as of December 31, 2022. As of June 30, 2023, we owned 448 aircraft in our aircraft portfolio, comprised of 332 narrowbody aircraft and 116 widebody aircraft, and we managed 80 aircraft. The weighted average fleet age and weighted average remaining lease term of flight equipment subject to operating lease as of June 30, 2023 was 4.5 years and 7.2 years, respectively. We have a globally diversified customer base of 118 airlines in 63 countries as of June 30, 2023.

The following table summarizes the key portfolio metrics of our fleet as of June 30, 2023 and December 31, 2022:

	June 30, 2023			December 31, 2022
Net book value of flight equipment subject to operating lease	$	25.5 billion		$	24.5 billion
Weighted-average fleet age(1)		4.5 years			4.5 years
Weighted-average remaining lease term(1)		7.2 years			7.1 years
Owned fleet(2)		448			417
Managed fleet		80			85
Aircraft on order		359			398
Total		887			900
Current fleet contracted rentals	$	16.2 billion		$	15.6 billion
Committed fleet rentals	$	13.4 billion		$	15.8 billion
Total committed rentals	$	29.6 billion		$	31.4 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 June 30, 2023, our owned fleet count includes 19 aircraft classified as flight equipment held for sale which is included in Other assets on the Consolidated Balance Sheet.

The following table details the regional concentration of our flight equipment subject to operating leases:

		June 30, 2023			December 31, 2022
Region		% of Net Book Value			% of Net Book Value
Europe		36.4	%		32.5	%
Asia (excluding China)		30.1	%		29.1	%
The Middle East and Africa		8.3	%		9.3	%
Central America, South America, and Mexico		8.2	%		7.8	%
China		7.6	%		11.4	%
U.S. and Canada		6.0	%		6.3	%
Pacific, Australia, and New Zealand		3.4	%		3.6	%
Total(1)		100.0	%		100.0	%
(1) As of December 31, 2022, we had four aircraft classified as held for sale with a carrying value of $153.5 million included in the table above.

The following table details the composition of our owned fleet by aircraft type:

		June 30, 2023					December 31, 2022
Aircraft type		Number of Aircraft		% of Total			Number of Aircraft		% of Total
Airbus A220-300		7		1.6	%		4		1.0	%
Airbus A319-100		1		0.2	%		1		0.2	%
Airbus A320-200		28		6.3	%		28		6.7	%
Airbus A320-200neo		24		5.4	%		23		5.5	%
Airbus A321-200		23		5.1	%		23		5.5	%
Airbus A321-200neo		89		19.8	%		78		18.7	%
Airbus A330-200(1)		13		2.9	%		13		3.1	%
Airbus A330-300		5		1.1	%		5		1.2	%
Airbus A330-900neo		20		4.5	%		16		3.8	%
Airbus A350-900		15		3.3	%		13		3.1	%
Airbus A350-1000		7		1.6	%		6		1.4	%
Boeing 737-700		3		0.7	%		4		1.0	%
Boeing 737-800		80		17.9	%		82		19.7	%
Boeing 737-8 MAX		51		11.4	%		47		11.3	%
Boeing 737-9 MAX		25		5.6	%		15		3.7	%
Boeing 777-200ER		1		0.2	%		1		0.2	%
Boeing 777-300ER		24		5.4	%		24		5.8	%
Boeing 787-9		25		5.6	%		27		6.5	%
Boeing 787-10		6		1.2	%		6		1.4	%
Embraer E190		1		0.2	%		1		0.2	%
Total(2)		448		100.0	%		417		100.0	%
(1) As of June 30, 2023, includes one Airbus A330-200 aircraft classified as a freighter.
(2) As of June 30, 2023, our owned fleet count includes 19 aircraft classified as flight equipment held for sale which is included in Other assets on the Consolidated Balance Sheet.