Willis Lease Finance Corporation reported second quarter total revenues of $109.0 million and pre-tax earnings of $19.0 million. For the three months ending June 30, 2023, Willis’ aggregate lease rent and maintenance reserve revenues were $89.8 million and spare parts and equipment sales were $4.6 million.
The company reported increased total revenues in Q2 as compared to the prior year primarily due to an increase in its core lease rent and short-term maintenance revenues driven by continued global recovery in travel.
“Our second quarter results reflect the fundamental strength of our core leasing business,” said Austin Willis, chief executive officer, Willis Lease. “A scarcity of serviceable spare engines and strong demand from the airlines, continues to drive favorable lease rates and terms.”
“Despite huge demand and industry-wide shortages, our teams continue to deliver for our customers that planned ahead and signed up for our custom-built programs as well as for those requiring ad hoc support,” said Brian R. Hole, president, Willis Lease. “As always, people make the difference and ours are world class.”
Willis’ recorded an increase of 17% on the lease rent revenue, or 48.3%, to $54.4 million in the Q2, 2023, compared to $36.7 million Q2, 2022 citing increase in the number of engines acquired and placed on lease, including an increase in utilization compared to that of the prior period.
The company’s maintenance reserve revenue was $35.4 million up by 46.1%, compared to $24.2 million in the same quarter of 2022.
There was $6.8 million long-term maintenance revenue recognized for the three months ended June 30, 2023, compared to $15.1 million in the comparable prior period.
Non-reimbursable maintenance reserve revenue is directly influenced by on lease engine flight hours and cycles. Engines out on lease with non-reimbursable usage fees generated $28.6 million of short-term maintenance revenues, compared to $9.2 million in the comparable prior period. As of June 30, 2023 and December 31, 2022, there was $19.8 million and $6.3 million, respectively, of cumulative deferred in-substance fixed payment use fees included in “Unearned revenue.”
Willis reported a decline in the spare parts and equipment sales to $4.6 million compared to $6.8 million in Q2, 2022
The company’s gain on sale of leased equipment was $4.5 million reflecting the sale of two engines and other parts and equipment from the lease portfolio. Gain on sale of leased equipment was $0.5 million in the second quarter of 2022, reflecting the sale of eight engines.
Gain on sale of financial assets was $3.1 million in the second quarter of 2022, reflecting the sale of four notes receivable. The company generated $19.0 million of pre-tax a 73.2% increase as compared to pre-tax income of $11.0 million in Q2, 2022.
The book value of lease assets owned directly or through joint ventures, inclusive of notes receivable, maintenance rights, and investments in sales-type leases, was $2,551.3 million at June 30, 2023. As of June 30, 2023, the company also managed 339 engines, aircraft and related equipment on behalf of other parties. The company maintained $242.0 millions of undrawn revolver capacity at June 30, 2023.
As of June 30, 2023, $2,161.7 millions of equipment held in the operating lease portfolio, $95.0 million of notes receivable, $14.0 millions of maintenance rights, and $5.8 millions of investments in sales-type leases, which represented 348 engines, 12 aircraft, one marine vessel and other leased parts and equipment.
As of December 31, 2022, the company had $2,111.9 million equipment in operating lease portfolio, $81.4 million of notes receivable, $17.7 millions of maintenance rights, and $6.4 millions of investments in sales-type leases, which represented 339 engines, 13 aircraft, one marine vessel and other leased parts and equipment.