Financial Performance - The company reported a net loss of $16.7 million for 2019, resulting in a basic and diluted loss per share of $(10.78), compared to a net loss of $8.1 million and $(5.58) per share in 2018[55]. - Revenues and other income increased by 61% to $43.6 million in 2019 from $27.1 million in 2018, driven by increased maintenance reserves revenue and a gain on sale of assets[74]. - Operating lease revenue decreased by 7% to $25.6 million in 2019 from $27.6 million in 2018, primarily due to early lease terminations and asset sales[75]. - Maintenance reserves revenue recorded in 2019 was $17.0 million, a significant increase from $1.6 million in 2018, due to lease terminations[76]. - Total expenses increased by 79% to $64.8 million in 2019 from $36.2 million in 2018, mainly due to higher asset impairment losses and bad debt expense[79]. - Impairment charges totaled $31.0 million in 2019, compared to $3.0 million in 2018, reflecting a significant increase in asset write-downs[80]. - Bad debt expense of $2.9 million was recorded in 2019, while no bad debt expense was recorded in 2018[81]. - Interest expense increased by 19% to $11.3 million in 2019 from $9.5 million in 2018, attributed to higher average interest rates[82]. Asset Management - The total number of aircraft held for lease decreased from 18 in 2018 to 11 in 2019, with a net book value of approximately $108 million, representing a 41% decrease from $184 million in 2018[53][68]. - The company held six aircraft subject to finance leases and seven aircraft for sale as of December 31, 2019[53]. - The weighted average fleet age increased to 11.8 years in 2019 from 11.1 years in 2018, with a weighted average remaining lease term of 41 months[68]. - The company did not purchase any aircraft in 2019 and sold one aircraft that had been held for lease, along with other reclassifications[53][69]. - The Company received net cash of $16.8 million from asset sales in 2019, compared to $16.6 million in 2018[114]. Financial Condition and Debt - The company experienced a Borrowing Base Deficit of $29.8 million as of December 31, 2019, due to impairment losses and bad debt allowances[59][60]. - The Company had a $29.8 million Borrowing Base Deficit under its MUFG Credit Facility at December 31, 2019[100]. - The Company borrowed $6.0 million under the MUFG Credit Facility in 2019, down from $21.0 million in 2018, and repaid $44.3 million of total outstanding debt in 2019[115]. - The Company is negotiating to convert the MUFG Credit Facility into the MUFG Term Loan, which may impact its future financing capabilities[85]. - The Company's financial condition is dependent on its ability to execute a Recapitalization Plan to refinance MUFG Indebtedness and obtain new capital[120]. - An event of default occurred under the Nord Term Loans due to nonpayment of lease payments, impacting the Company's financial stability[121]. Customer and Revenue Sources - Approximately 30% of the company's operating lease revenue for 2019 was derived from customers in the United States, with significant contributions from Spain, Slovenia, and Croatia[70]. - The company's five largest customers accounted for approximately 86% of monthly operating lease revenue for the year ended December 31, 2019[147]. Risks and Challenges - The ongoing COVID-19 pandemic has caused a dramatic decrease in passenger loads and airline ticket bookings, leading to significant cash flow issues for airlines[122]. - The company faces risks from noncompliance with MUFG Indebtedness, which could lead to default and foreclosure on its assets[125]. - The company faces risks from lessee defaults, particularly in low-growth areas, which could lead to total loss of receivables and additional costs for repossession[145]. - International leasing exposes the company to economic instability and currency conversion risks, potentially affecting lease payments[168][169]. - The company may enter into deferral agreements for overdue lessee obligations, which could materially affect financial results and reduce borrowing capacity under the MUFG Credit Facility[146]. - Interest rate fluctuations could materially increase the company's interest payment obligations under MUFG Indebtedness, adversely affecting liquidity and financial condition[158]. - The company’s ability to re-lease or sell aircraft after lease expiration is dependent on market conditions, which could adversely affect financial performance[153]. - The company recorded impairment losses totaling $22.3 million related to four aircraft due to a customer's bankruptcy, impacting the borrowing base and compliance with MUFG Credit Facility covenants[147]. Operational and Regulatory Considerations - The company is responsible for all expenses incurred by JMC post-merger, which could lead to increased costs and financial fluctuations[150]. - The company may incur additional costs due to government regulations affecting aircraft safety and operational requirements[182]. - The Company faces potential compliance costs due to increasingly stringent environmental regulations, which may not have a material adverse effect on its financial position currently, but future regulations could pose risks[187]. - Cybersecurity risks include potential interruptions in email communications and loss of proprietary information, although the Company believes it has sufficient measures in place to mitigate these risks[188]. Market and Competitive Landscape - Competition in the aircraft leasing industry is intense, with competitors having greater financial resources and market penetration, which could pressure lease rates and revenues[162][163]. - The company intends to focus solely on regional aircraft, which may limit diversification and increase exposure to market-specific risks[175]. - The company’s lease rates are fixed at origination, meaning significant interest rate increases could lead to decreased net income if revenue growth does not keep pace[159]. - The company's aircraft portfolio is concentrated on a limited number of aircraft types, which increases risks related to valuation and future rental revenues[160]. - The company faces risks from regional air carriers that rely on major carriers for revenue, which could impact demand for its aircraft[166].
Mega Matrix(MPU) - 2019 Q4 - Annual Report