Air Lease Corporation (ALC) has reported its financial results for the three and six months ended June 30, 2021. Total revenues for the three months ended June 30, 2021 decreased by 5.7% to $491.9 million compared to the three months ended June 30, 2020. Despite the continued growth of ALC’s fleet, the lessor was not able to recognize $41.6 million of rental revenue during the three months ended June 30, 2021, because lease receivables exceeded the lease security package held and collection was not reasonably assured for certain leases, of which $27.9 million was related to Vietnam Airlines, with whom the company is working towards a resolution.
ALC has entered into lease restructurings, which typically included lease extensions, that resulted in a decrease of approximately $45.1 million in revenue for the quarter ended June 30, 2021. These decreases in revenue were partially offset by an increase in other revenues of $34.0 million recognized in connection with the sale to a third party of certain unsecured claims related to insolvency proceedings for Aeromexico.
ALC’s net income for the three months ended June 30, 2021 was $85.6 million compared to $143.8 million in 2020. Diluted earnings per share for the three months period was $0.75 compared to $1.26 for year-ago period. The decrease in net income was primarily due to the decrease in revenues, an increase in depreciation and interest expense from the growth of ALC’s fleet.
“On an overall global scale, the airline industry is improving. Passenger traffic is staging a robust recovery in the U.S.A., Mexico, China, Russia, and most of Europe, with international and long haul traffic at a much slower recovery rate. Outside of China, Asia overall lags in traffic recovery and vaccination rates. Although we still face some customer and OEM challenges in the near term, our operating cash flow continues to strengthen. Lease placements from our fleet and orderbook are accelerating as airlines view recovery and the desirability of fleet transformation to enhance operating economics and environmental sustainability,” said John L. Plueger, Chief Executive Officer and President.
“Pent up demand is resulting in rapid and strong recovery when and where travel restrictions are lifted. Accordingly, we are focusing our leasing efforts on the most rapidly recovering regions, such as growing our U.S.A. book of business, where we see more potential ahead. Canada opening its borders should provide a further stimulant to North America, while we anticipate trans-Atlantic traffic recovery in the near future. Strong freight and e-commerce demand is aiding airline recovery globally, which is particularly beneficial for our widebody customers in Asia and Europe. We continue to see a bright future for ALC in providing for the growing demands of commercial aviation,” said Steven F. Udvar-Házy, Executive Chairman of the Board.
During the reporting period, ALC took delivery of 12 aircraft from its orderbook, representing $971 million in aircraft investments. As of June 30, 2021, ALC owned 354 aircraft in its operating lease portfolio with a net book value of $21.5 billion, a weighted average age of 4.3 years and a weighted average lease term remaining of 6.9 years.
ALC has placed 93% of its contracted orderbook positions on long-term leases for aircraft delivering through the end of 2022 and 80% through the end of 2023.
The leasing company ended the quarter with $27.1 billion in committed minimum future rental payments consisting of $14.3 billion in contracted minimum rental payments on the aircraft in the existing fleet and $12.8 billion in minimum future rental payments related to aircraft on order.
To date, ALC reports that 52% of the lease deferrals granted have been repaid, representing $126.9 million. This contributed to the 29% increase in operating cash flow for the six months ended June 30, 2021.
ALC has issued $1.8 billion in aggregate principal amount Medium-Term Notes consisting of $1.2 billion at a fixed rate of 1.875% due 2026 and $600.0 million at a floating rate of three-month LIBOR plus 0.35% due 2022.
In July 2021, Fitch Ratings reaffirmed ALC’s corporate and long-term debt ratings at BBB and upgraded our outlook to stable.
The company declared a quarterly cash dividend of $0.16 per share on its outstanding Class A common stock for the second quarter of 2021.
ALC said that it has continued to experience delivery delays from Boeing and Airbus, delays related to the grounding of the Boeing 737 MAX, temporary suspension of Boeing 787 deliveries, and pre-pandemic Airbus delays that remain ongoing. The lessor warns that these delays and the ongoing COVID-19 pandemic could impact its aircraft delivery schedule that could continue to be subject to material changes and delivery delays could potentially extend well into 2022 and beyond.
ALC ended the second quarter of 2021 with total debt financing, net of discounts and issuance costs, of $16.5 billion, with a debt to equity ratio of 2.54:1 and available liquidity of $7.6 billion.
