Aircastle has reported third quarter 2011 net income of $22.7 million, or $0.31 per diluted common share, and adjusted net income of $15.4 million, or $0.21 per diluted common share.
Lease rental revenue for the third quarter was $145.9 million, up by $12.4 million, or 9%, year-over-year, due primarily to the impact of aircraft acquisitions net of dispositions of $19.2 million. The increase was partially offset by lower lease rentals due to lease terminations, lease transitions and extensions of $6.8 million.
Total revenues for the third quarter were $141.5 million, up by $9.3 million, or 7%, year-over-year. The increase reflects higher lease rental revenue, which was partially offset by a $2.5 million decrease in maintenance revenue. As the company expected, no maintenance revenue was recorded during the third quarter of 2011.
During the third quarter Aircastle recorded an impairment charge of $1.2 million related to one Boeing Model 737-400 aircraft which the lessor is looking to sell. The lease on this aircraft had been early terminated in the second quarter, at which time Aircastle had recorded a $5.2 million impairment charge and maintenance and other revenue totalling $3.1 million.
Ron Wainshal, Aircastle's CEO, said: "The Company's strong performance during the third quarter benefited from effective asset management as well as the earnings power of our recent acquisitions. Once again, we demonstrated our ability to profit through our value-added approach to investing. Looking ahead, Aircastle is in an excellent position to make use of its bond market access to purchase attractively priced aircraft in the wake of more challenging bank market conditions. Indeed, since the end of the third quarter, Aircastle has invested $255 million to acquire eight aircraft. We are continuing our balanced approach of providing shareholders with value not only through new investments but also our share repurchase program and dividend policy."
He added: "Today's dividend declaration represents the second time Aircastle has increased its distribution this year. In total, Aircastle has now increased its quarterly dividend 50% in 2011. The Company's $0.15 per share quarterly dividend demonstrates the confidence the Board and management have in Aircastle's ability to continue generating strong cash flows as well as their ongoing commitment to creating shareholder value."
EBITDA for the third quarter was $137.6 million, up by $21.5 million from the third quarter of 2010, reflecting higher lease rental revenue of $12.4 million, gains totaling $9.0 million from the sale of aircraft and a reduction in impairment charges of $6.1 million compared to the prior period. The impact of these items was partially offset by a $2.5 million decrease in maintenance revenue as discussed above and higher maintenance and other costs of $2.9 million.
Adjusted net income plus depreciation and amortization for the quarter was $80.2 million, a year-over-year increase of $7.7 million. This was due primarily to an increase in lease rental revenue of $12.4 million, a quarter-to-quarter reduction in impairment charges of $6.1 million, partially offset by a decrease in maintenance revenue of $2.5 million and increases in adjusted interest expense of $3.4 million and maintenance and other costs totaling $2.9 million.
Adjusted net income for the quarter was $15.4 million, up $2.8 million year-over-year, reflecting an increase of $9.3 million in total revenues and a reduction in impairment charges of $6.1 million, partially offset by increases of $4.4 million in depreciation, $3.4 million in adjusted interest expense and maintenance and other costs of $2.9 million.
During the third quarter, Aircastle entered into a 12-year term loan with Bank of Tokyo-Mitsubishi-UFJ for the financing of one new Airbus A330-200 passenger aircraft and a 12-year term loan with Citibank for the financing of one new Airbus A330-200F freighter aircraft. Both loans are supported by a guarantee from the French export credit agency, COFACE. These financings bear interest at fixed rates of 3.02% and 3.10%, respectively.
In September 2011, Aircastle entered into a new five-year forward starting interest rate swap arrangement for Securitization No. 2 with an average fixed rate of 1.27%. This rate plus the applicable spread for this financing equals a new fixed pay interest rate of 1.58%, which represents a significant reduction compared to the existing equivalent rate of 5.53%. The new interest rate swap arrangement begins at the expiration of the existing arrangement in June 2012 and is structured to hedge approximately 75% of the expected debt balance of Securitization No. 2 over the term of the new arrangement.