Air Lease (US:AL)2021-08-06 06:43Financial Data and Key Metrics Changes - For Q2 2021, total revenues were reported at $492 million, a decrease of 6% compared to the same quarter last year, while diluted EPS was $0.75, down 41% year-over-year [9] - The company experienced an improvement in collection rates to 87% from 84% in Q1, and lease utilization was strong at 99.7% [10] - The net deferrals balance declined to $115 million from $131 million, with over half of the deferrals granted to date having been repaid [10][32] Business Line Data and Key Metrics Changes - The company took delivery of approximately $1 billion in new aircraft during Q2, which was $200 million less than anticipated, with 50% of these deliveries occurring in June [10] - Rental revenues were negatively impacted by $87 million due to cash basis accounting and lease restructurings, with $42 million attributed to one customer, Vietnam Airlines [11][30] Market Data and Key Metrics Changes - The recovery of air travel varies significantly by geography, with regions like the US, China, and parts of Europe seeing a rebound, while many Asian countries face challenges due to lower vaccination rates [7][8] - Domestic travel has improved more quickly than international travel, with domestic RPKs down only 22% compared to June 2019, while international RPKs were down 81% [22] Company Strategy and Development Direction - The company is focused on maintaining a strong asset base and is currently in a buyer's market for aircraft, preferring to acquire rather than sell [41] - The company aims to maintain a balanced fleet composition, targeting 20% to 25% wide-body aircraft in the long term while increasing single-aisle aircraft [77] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing recovery in air travel, despite challenges posed by the Delta variant and varying recovery rates across regions [18] - The company anticipates continued demand for modern, fuel-efficient aircraft, driven by sustainability initiatives and the need for airlines to modernize their fleets [28] Other Important Information - The company declared a dividend of $0.16 per share for Q2 2021, reflecting confidence in the ongoing recovery [18] - The company has $27.1 billion in revolving commitments on its current fleet and forward order book, indicating strong future growth potential [13] Q&A Session Summary Question: Where are the most attractive opportunities to acquire additional aircraft? - The company sees good prospecting opportunities and plans to make announcements regarding aircraft acquisitions in the coming quarters, emphasizing a preference to hold onto existing assets due to delivery delays [41] Question: How should rental income be modeled going forward? - Management indicated that lease restructurings typically involve extending lease terms at lower rates, but they aim to achieve equivalent recovery over time [46] Question: What is the outlook for cash basis loans and claims recoveries? - Management noted that while they received a partial payment from Vietnam, future outcomes are uncertain and depend on governmental support for the airline [58] Question: How does the company view the impact of global warming on emissions reduction targets? - Management acknowledged the importance of achievable goals and emphasized that the industry must balance aspirational targets with practical capabilities [80]