Air Lease Corporation Announces Second Quarter 2012 Results

LOS ANGELES—(BUSINESS WIRE)—Air Lease Corporation (ALC) (NYSE:AL) announced today the results of its operations for the three and six months ended June 30, 2012.

Q2 Highlights

Air Lease Corporation reports another quarter of consecutive fleet, profitability and financing growth:

Diluted EPS increased 250% to $0.28 per share in the second quarter of 2012 compared to $0.08 in the second quarter of 2011. Diluted EPS increased 315% to $0.54 per share for the six months ended June 30, 2012 compared to $0.13 per share for the six months ended June 30, 2011.
Increased our pipeline of the most fuel-efficient, in demand, profitable aircraft with an order of 100 737-8/9 MAX aircraft, 25 of which are subject to reconfirmation.
Announced two of our largest narrowbody lease placements to date with premier carriers, including 18 new aircraft with China Southern, which is our single largest lease transaction, and the placement of 13 new aircraft with Air China.
Lowered our composite cost of funds to 3.84% as of June 30, 2012 compared to 4.05% as of March 31, 2012.
Deployed more than $950 million in capital further growing our fleet to 137 aircraft spread across a diverse and balanced customer base of 65 airlines and 37 countries.

“For our second quarter 2012 and year-to-date results, I’m pleased to announce continuing successive record results in the execution of our growth plan. During the second quarter ALC saw stable lease demand for our new aircraft positions despite financial headlines regarding Europe and potential slowing in China. With our recent launch order for the Boeing 737 MAX and the favorable economics associated with being a launch customer we have secured ALC’s core business through 2022 with a product that has strong market demand. Our lease placements continue to be in line with our expectations and we are nearing full placement of our new aircraft deliveries through 2015,” said Steven F. Udvar-Házy, Chairman and Chief Executive Officer of Air Lease Corporation.

“We announced major aircraft lease placements with Air China and China Southern, demonstrating the shift in our fleet distribution towards Asia over the next several years. Our lease terms have been trending longer, up to 12 years on both wide-body and single aisle aircraft, which locks in strong future rental revenue. Longer leases provide greater earnings visibility and less risk, with a slight tradeoff in future recognition of overhaul revenue for accounting purposes due to a higher number of reimbursable maintenance events that occur during the lease term. All of our leases are performing well. We successfully removed our single A320 from Kingfisher without incurring a credit loss and that aircraft has been re-leased,” said John L. Plueger, President and Chief Operating Officer of Air Lease Corporation.

“We continued our planned and predictable growth that has translated into increased fleet size, new customers, and rising profits. As each quarter passes, ALC is staying ahead of the financial goals laid out during our IPO. We continue to fund the company on an unsecured basis, highlighted by having successfully closed an unsecured $853 million syndicated bank facility during the quarter. Subsequently, we have grown our aggregate unsecured revolving bank facilities to $1 billion,” said Gregory B. Willis, Senior Vice President and Chief Financial Officer of Air Lease Corporation.

Fleet Growth

Building on our base of 114 aircraft at March 31, 2012, we added 23 aircraft during the second quarter of 2012 and ended the quarter with 137 aircraft spread across a diverse and balanced customer base of 65 airlines based in 37 countries.

We have made further progress in placing our aircraft. As of June 30, 2012, we have entered into contracts for the lease of all 15 aircraft delivering in 2012, for 28 out of 30 new aircraft delivering in 2013, for 26 out of 27 new aircraft delivering in 2014, for eight out of 26 new aircraft delivering in 2015, for one of 24 new aircraft delivering in 2017, and for seven out of 31 new aircraft delivering in 2018.

Debt Financing Activities

During the second quarter of 2012, the Company entered into additional debt facilities aggregating $885.6 million, which included our $853.0 million Syndicated Unsecured Revolving Credit Facility and additional unsecured term facilities aggregating $32.6 million. We ended the quarter with total unsecured debt outstanding of $2.2 billion. The Company’s unsecured debt as a percentage of total debt increased to 55.1% as of June 30, 2012 from 31.7% as of December 31, 2011. We ended the second quarter of 2012 with a conservative balance sheet with low leverage and ample available liquidity of $1.2 billion. As part of our 2012 financing strategy we will continue to focus on financing the Company on an unsecured basis.

We will continue to focus our financing efforts throughout 2012 on raising unsecured debt through the international and domestic capital markets, the global bank market, reinvesting cash flow from operations and, to a limited extent, through secured financings including government guaranteed loan programs from the European Export Credit Agencies in support of our new Airbus aircraft deliveries, from Ex-Im Bank in support of our new Boeing aircraft deliveries and direct financing from BNDES/SBCE in support of our new Embraer deliveries.

As of June 30, 2012, we had established a diverse lending group consisting of 30 banks across six general types of lending facilities. The Company’s debt financing was comprised of the following at June 30, 2012 and December 31, 2011 (dollars in thousands).