Aircastle has reported an 11.2% increase in total revenues to $204.3 million for the first quarter of 2017, while net income rose by 17% to $42.4 million (adjusted net income was $45.7 million). The increase was driven by an $11.6 million increase in lease rental and finance and sales-type lease revenues, and an $11.0 million increase in maintenance revenues. Rental revenues were higher due to net fleet growth, while maintenance revenues rose primarily due to return compensation from two lessees during the first quarter of 2017. Total maintenance revenues were $12.3 million in the first quarter of 2017 versus $1.3 million in the prior year. Total lease rental and finance and sales-type lease revenues were $194.7 million – an increase of 6.3%, versus $183.1 million in the first quarter of 2016.
During the quarter, Aircastle issued $500 million of new seven year, senior unsecured notes at a record low coupon of 4.125%. the lessor also closed or committed to acquire eighteen aircraft this year for more than $400 million and declared its 44th consecutive quarterly dividend.
"Amid a strong aircraft financing environment, Aircastle has continued to benefit from our strategic flexibility, solid balance sheet, and our opportunistic investment strategy,” said Mike Inglese, Aircastle's Chief Financial Officer and Acting CEO. “We have remained disciplined in the pursuit of acquisitions and are determined to act only where opportunities have appealing risk and return profiles. With our unique ability to provide value-added solutions to customers, we successfully closed $190 million of aircraft acquisitions during the first quarter and secured commitments to close a further $220 million. We also seized the opportunity to sell or commit to sell several additional aircraft on appealing terms, continuing our progress in optimizing the fleet mix. A number of these aircraft sales are expected to close in the second quarter."
Inglese added, "We also made significant strides in our efforts to continue strengthening our balance sheet. Notably, we successfully raised $500 million during the first quarter to replace a maturing 6.75% debt financing with highly attractive, seven year unsecured notes at a record low coupon of 4.125%. This refinancing will generate more than $13 million of annual interest savings."
Inglese concluded, "In addition to achieving significant improvements to our fleet and our balance sheet, Aircastle also continued to deliver solid financial and operational results. We increased our net income by $6.2 million versus the prior year's first quarter, to $42.4 million, and achieved a solid cash ROE of 12.0%, while maintaining fleet utilization of 98.3%, in line with our historical average. Moving forward, Aircastle is in a strong position to continue expanding our earnings power, enhance our fleet, and provide our investors with an attractive, reliable dividend."
Aircastle also revealed during its results update that Ron Wainshal's medical leave of absence will continue in the second quarter. Peter V. Ueberroth, Aircastle's Chairman of the Board, speaking on behalf of the Board of Directors, stated: "Ron continues to work hard on his recovery and is making progress; however, we do not expect him to return as CEO during the second quarter."
Ueberroth added: "The Board continues to have great faith in Acting CEO Mike Inglese's service in that role, and the depth and capability of the management team at Aircastle."
During the first quarter of 2017, Aircastle acquired eight aircraft for approximately $190 million and had commitments to acquire ten additional aircraft for more than $220 million. These eighteen aircraft have a weighted average age of approximately 7.9 years and a weighted average remaining lease term of 7.6 years. Narrow-body aircraft comprise seventeen of the total aircraft acquired.
As of March 31, 2017, Aircastle owned 200 aircraft having a net book value of $6.6 billion. It also managed thirteen aircraft with a net book value of $682 million on behalf of its joint ventures.