Air Lease (US:AL)2025-08-04 20:04PART I—FINANCIAL INFORMATION Item 1. Financial Statements Q2 2025 financial statements show net income surging to $374.1 million from insurance recoveries, with total assets growing to $33.3 billion Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $33,295,410 | $32,277,896 | | Flight equipment, net | $29,131,786 | $28,170,466 | | Total Liabilities | $25,071,179 | $24,745,270 | | Debt financing, net | $20,320,406 | $20,209,985 | | Total Shareholders' Equity | $8,224,231 | $7,532,626 | Consolidated Income Statement Highlights (in thousands) | Account | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues and other income | $731,696 | $667,288 | $1,469,978 | $1,330,598 | | Recoveries of Russian fleet write-off | $(344,002) | $— | $(675,940) | $— | | Income before taxes | $486,581 | $127,741 | $958,249 | $263,069 | | Net income attributable to common stockholders | $374,086 | $90,438 | $738,837 | $187,879 | Earnings Per Share (Diluted) | Period | Diluted EPS | | :--- | :--- | | Q2 2025 | $3.33 | | Q2 2024 | $0.81 | | H1 2025 | $6.59 | | H1 2024 | $1.68 | - Net cash provided by operating activities increased to $862.0 million for the first six months of 2025, up from $785.1 million in the same period of 2024, driven by higher customer collections from a larger fleet20172 Notes to Consolidated Financial Statements Notes detail accounting policies, $20.5 billion debt, significant Russian fleet insurance recoveries, and $14.1 billion in future aircraft commitments - As of June 30, 2025, the company owned 495 aircraft, managed 53, and had 241 new aircraft on order from Boeing and Airbus25 Debt Financing Summary (June 30, 2025, in thousands) | Debt Type | Amount | | :--- | :--- | | Total Unsecured Debt | $19,947,830 | | Total Secured Debt | $530,202 | | Total Debt Financing | $20,478,032 | - During the first half of 2025, the company recognized $675.9 million in recoveries from insurance settlements related to aircraft detained in Russia. As of August 4, 2025, total recoveries reached $822.4 million against the initial $791.0 million write-off5357220 - The company has contractual commitments to acquire 241 new aircraft through 2031, with an estimated aggregate commitment of $14.1 billion. These deliveries are subject to ongoing delays from manufacturers6474 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strong Q2 2025 performance, highlighting $731.7 million revenue and $374.1 million net income, driven by insurance recoveries and fleet growth, while maintaining $7.9 billion liquidity Our Fleet and Orderbook The owned fleet comprises 495 aircraft with a $29.1 billion net book value, and 241 new aircraft are on order for $14.1 billion, facing manufacturer delays Fleet Portfolio Metrics | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net book value | $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 | - The company has contractual commitments for 241 new aircraft with an estimated cost of $14.1 billion. However, management provides an 'expected' delivery schedule that reflects anticipated delays from manufacturers, pushing some deliveries into later years128131133 - Significant manufacturing delays from Airbus and Boeing are expected to continue for at least the next three to four years, impacting the company's delivery schedule. The FAA's cap on Boeing's 737 MAX production and Airbus's production delays on A320/321neo aircraft are key factors135137 Liquidity and Capital Resources Q2 2025 liquidity reached $7.9 billion, with total debt at $20.5 billion (97.4% unsecured, 76.7% fixed-rate), prioritizing new aircraft investments - Total available liquidity was $7.9 billion, consisting of $454.8 million in cash and approximately $7.5 billion in undrawn revolving credit facilities (net of commercial paper)116157 Debt Profile as of June 30, 2025 | Metric | Value | | :--- | :--- | | Total Debt Outstanding | $20.5 billion | | Percentage Unsecured | 97.4% | | Percentage Fixed-Rate | 76.7% | | Composite Cost of Funds | 4.28% | - The company established a commercial paper program in January 2025 with a capacity of up to $2.0 billion. As of June 30, 2025, $936.0 million was outstanding47166 Results of Operations Q2 2025 total revenues rose 9.7% to $731.7 million, with net income surging to $374.1 million primarily due to Russian fleet insurance recoveries - The increase in Q2 2025 net income was primarily due to a $344.0 million net benefit from the settlement of insurance claims related to aircraft detained in Russia208213 - Lease rental revenue for Q2 2025 was $647.7 million, up from $594.8 million in Q2 2024, reflecting the continued growth of the aircraft fleet203 - Interest expense rose to $222.3 million in Q2 2025 from $203.3 million in Q2 2024, due to a higher composite cost of funds (4.28% vs. 3.99%) and a larger outstanding debt balance206 Reconciliation to Adjusted Net Income Before Income Taxes (Q2, in thousands) | Description | 2025 | 2024 | | :--- | :--- | :--- | | Net income attributable to common stockholders | $374,086 | $90,438 | | Adjustments (Recoveries, non-cash items, taxes) | $(216,697) | $46,924 | | Adjusted net income before income taxes | $157,389 | $137,362 | Item 3. Quantitative and Qualitative Disclosures About Market Risk Primary market risks include interest rate risk on $4.8 billion floating-rate debt, where a 1.0% increase would cost $47.7 million annually, and minimal foreign exchange risk - The company is exposed to interest rate risk through its $4.8 billion in floating-rate debt. A 1.0% increase in the composite interest rate on this debt would increase annual interest expense by approximately $47.7 million231 - Foreign exchange risk is limited as most transactions are in U.S. dollars. Approximately 0.3% of lease revenues and 0.7% of total assets (related to sales-type leases) were denominated in foreign currencies as of June 30, 2025233 Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - Based on an evaluation as of June 30, 2025, the company's Certifying Officers concluded that disclosure controls and procedures were effective237 - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal controls238 PART II—OTHER INFORMATION Item 1. Legal Proceedings The company pursued legal actions for Russian aircraft losses, achieving $675.9 million in settlements from California Litigation, with London Litigation ongoing - The company filed suit against its insurers in California (California Litigation) and against Russian airlines' insurers in England (London Litigation) to recover losses from aircraft detained in Russia240241 - In H1 2025, settlements with most insurers in the California Litigation resulted in a recognized net benefit of $675.9 million. The company anticipates the dismissal of this litigation in Q3 2025242244 Item 1A. Risk Factors No material changes to risk factors, except for expanded discussion on potential negative effects of income and other taxes from multi-jurisdictional operations and tax law changes - A new risk factor was added concerning the potential negative impact of income and other taxes from multi-jurisdictional operations, including changes in tax laws and international tax developments like the OECD's BEPS project248 Item 5. Other Information A one-time $1 million cash bonus was awarded to the General Counsel for contributions to the Russian insurance litigation - A one-time cash bonus of $1 million was awarded to the company's General Counsel for her efforts related to the Russian insurance litigation252