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Air Lease (AL) - 2025 Q2 - Quarterly Results
Air Lease Air Lease (US:AL)2025-08-04 20:03

Second Quarter 2025 Financial Results Air Lease reported robust Q2 2025 performance, marked by significant revenue growth and a substantial increase in net income driven by a Russian fleet recovery Operating Results Air Lease achieved strong Q2 2025 results with revenues up 9.7% to $731.7 million, and net income attributable to common stockholders surging 313.8% to $374.1 million, largely due to a $344.0 million recovery from its former Russian fleet write-off - The CEO highlighted a strong quarter driven by new aircraft deliveries, healthy gains on sales, increasing portfolio yield, and significant Russia insurance recoveries, noting robust demand for aircraft leasing and sales1 Q2 2025 Operating Results (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $731.7 million | $667.3 million | 9.7% | | Recoveries of Russian fleet write-off | $344.0 million | $0 million | N/A | | Income before taxes | $486.6 million | $127.7 million | 281.0% | | Net income attributable to common stockholders | $374.1 million | $90.4 million | 313.8% | | Diluted earnings per share | $3.33 | $0.81 | 311.1% | | Adjusted net income before income taxes | $157.4 million | $137.4 million | 14.6% | | Adjusted diluted EPS before income taxes | $1.40 | $1.23 | 13.8% | Key Financial Ratios The company's pre-tax margin significantly improved to 66.5% in Q2 2025, primarily due to a one-time insurance recovery, while the adjusted pre-tax margin showed a modest increase to 21.5% Key Financial Ratios Comparison | Ratio | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Pre-tax margin | 66.5% | 19.1% | | Adjusted pre-tax margin | 21.5% | 20.6% | | Pre-tax return on common equity (TTM) | 17.0% | 10.4% | | Adjusted pre-tax return on common equity (TTM) | 9.0% | 10.8% | Highlights Key highlights include an 11% increase in rental revenue, a significant $344 million insurance settlement for Russian aircraft, and the expansion of the owned fleet to 495 aircraft Financial Overview In Q2 2025, total rental of flight equipment revenue grew by 11% to $679 million, driven by fleet expansion and increased end-of-lease revenue, while net income surged to $374 million primarily due to a $344 million insurance settlement for aircraft in Russia - Total rental of flight equipment revenue increased by approximately 11% to $679 million, largely due to fleet growth and a substantial rise in end-of-lease revenue from $2 million in Q2 2024 to $20 million in Q2 20255 - Net income attributable to common stockholders increased significantly from the prior year, primarily due to a $344 million net benefit from the settlement of insurance claims related to aircraft detained in Russia7 - Gain on aircraft sales decreased by 8% to $53 million due to lower sales volume (4 aircraft sold in Q2 2025 vs. 11 in Q2 2024), though this was partially offset by higher management fee revenue6 Operational Highlights The company expanded its owned fleet to 495 aircraft with 12 new deliveries, achieved a 104% recovery of its Russian fleet write-off through insurance settlements, and maintains a strong sales pipeline and orderbook placement - Took delivery of 12 aircraft, representing $892 million in investments, ending the quarter with 495 aircraft in the owned fleet9 - Recognized a $344 million net benefit from Russian fleet insurance settlements in Q2 and expects an additional $60 million in Q3, bringing total recovery agreements to 104% of the March 2022 write-off9 - The company has a $1.4 billion aircraft sales pipeline and has placed 100% of its orderbook delivering through 2026 and 87% through 2027 on long-term leases9 - The board of directors approved a quarterly cash dividend of $0.22 per share, payable on October 8, 20259 Flight Equipment Portfolio The flight equipment portfolio grew to a net book value of $29.1 billion, comprising 495 owned aircraft with a weighted average age of 4.8 years and a remaining lease term of 7.2 years, serving 109 airlines globally Portfolio Metrics As of June 30, 2025, the net book value of the fleet increased to $29.1 billion, with the owned fleet consisting of 495 aircraft, maintaining a weighted-average age of 4.8 years and a remaining lease term of 7.2 years Fleet Portfolio Metrics (as of June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Net book value of flight equipment | $29.1 billion | $28.2 billion | | Weighted-average fleet age | 4.8 years | 4.6 years | | Weighted-average remaining lease term | 7.2 years | 7.2 years | | Owned fleet | 495 | 489 | | Managed fleet | 53 | 60 | | Aircraft on order | 241 | 269 | | Total committed rentals | $28.8 billion | $29.5 billion | Regional Concentration and Fleet Composition The company's fleet maintains geographical diversification, with Europe and Asia Pacific representing the largest regions by net book value, and the owned fleet primarily composed of narrowbody aircraft, notably Airbus A321-200neo and Boeing 737-8 MAX models Regional Concentration by Net Book Value (June 30, 2025) | Region | % of Net Book Value | | :--- | :--- | | Europe | 40.5% | | Asia Pacific | 36.1% | | Central America, South America, and Mexico | 9.5% | | The Middle East and Africa | 7.7% | | U.S. and Canada | 6.2% | - As of June 30, 2025, the owned fleet consisted of 495 aircraft, with the most common types being the Airbus A321-200neo (109 aircraft) and the Boeing 737-8 MAX (69 aircraft)14 Debt Financing Activities Air Lease's debt financing totaled $20.3 billion with $7.9 billion in liquidity, characterized by a predominantly unsecured and fixed-rate profile, and a composite cost of funds of 4.28% Debt Portfolio Summary At the end of Q2 2025, Air Lease reported total debt financing of $20.3 billion and total liquidity of $7.9 billion, with 97.4% of debt being unsecured and 76.7% fixed-rate, resulting in a composite cost of funds of 4.28% Debt Profile (as of June 30, 2025) | Metric | Value | | :--- | :--- | | Total debt financing, net | $20.3 billion | | Total liquidity | $7.9 billion | | Composite cost of funds | 4.28% | | Percentage of total debt at a fixed-rate | 76.7% | | Percentage of total debt unsecured | 97.4% | Corporate Information and Disclosures This section provides details on the upcoming conference call for Q2 2025 financial results and outlines the forward-looking statements and key risk factors affecting the company's operations and financial performance Conference Call Information Air Lease will host a conference call on August 4, 2025, at 4:30 PM Eastern Time to discuss its second quarter 2025 financial results, with details provided for participation via phone and webcast - A conference call to discuss Q2 2025 financial results is scheduled for August 4, 2025, at 4:30 PM Eastern Time18 Forward-Looking Statements and Risk Factors This press release contains forward-looking statements regarding the airline industry, capital access, the Russia-Ukraine conflict's impact, and aircraft delivery delays, which are subject to various risks and uncertainties detailed in the company's SEC filings - The report contains forward-looking statements regarding industry state, capital access, Russia-Ukraine war impact, and aircraft delivery delays23 - Key risk factors include the inability to obtain capital, rising borrowing costs, manufacturer failures, ability to recover losses from aircraft in Russia, and lessee financial condition25 Consolidated Financial Statements This section presents the company's consolidated balance sheets, statements of income, and statements of cash flows, offering a comprehensive view of its financial position, performance, and liquidity Consolidated Balance Sheets As of June 30, 2025, Air Lease reported total assets of $33.3 billion, an increase from $32.3 billion at year-end 2024, primarily driven by growth in flight equipment, with total liabilities at $25.1 billion and shareholders' equity rising to $8.2 billion Balance Sheet Summary (in billions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $33.30 | $32.28 | | Flight equipment subject to operating leases, net | $29.13 | $28.17 | | Total Liabilities | $25.07 | $24.75 | | Debt financing, net | $20.32 | $20.21 | | Total Shareholders' Equity | $8.22 | $7.53 | Consolidated Statements of Income For the three months ended June 30, 2025, total revenues reached $731.7 million, with a significant $344.0 million recovery of the Russian fleet write-off contributing to an income before taxes of $486.6 million and net income attributable to common stockholders of $374.1 million Income Statement Summary - Three Months Ended June 30 | Account (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Total rental of flight equipment revenue | $678.7 | $609.5 | | Total revenues and other income | $731.7 | $667.3 | | Recoveries of Russian fleet write-off | ($344.0) | $0 | | Income before taxes | $486.6 | $127.7 | | Net income attributable to common stockholders | $374.1 | $90.4 | Non-GAAP Reconciliations The company provides reconciliations for non-GAAP measures, such as adjusted net income before income taxes, which for Q2 2025, adjusted net income of $374.1 million for items like the $344.0 million Russian fleet recovery and income tax expense, resulting in an adjusted net income before income taxes of $157.4 million - Management uses non-GAAP measures like adjusted net income before income taxes to assess ongoing operational performance by removing the effects of certain non-cash, one-time, or non-recurring items3132 Reconciliation to Adjusted Net Income Before Income Taxes (Q2 2025) | Item (in millions) | Amount | | :--- | :--- | | Net income attributable to common stockholders | $374.1 | | Recoveries of Russian fleet write-off | ($344.0) | | Income tax expense | $101.4 | | Other adjustments (amortization, stock comp.) | $25.9 | | Adjusted net income before income taxes | $157.4 | Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities was $862.0 million, while net cash used in investing activities totaled $972.4 million, partially offset by $611.7 million from insurance claim settlements, resulting in a net decrease in cash of $17.1 million Cash Flow Summary - Six Months Ended June 30, 2025 | Cash Flow Activity (in millions) | Amount | | :--- | :--- | | Net cash provided by operating activities | $862.0 | | Net cash used in investing activities | ($972.4) | | Net cash provided by financing activities | $93.3 | | Net decrease in cash | ($17.1) |