|
||||||||||||||||||||||||||
| SEC Info℠ | | | Home | | | Search | | | My Interests | | | Help | | | Sign In | | | Please Sign In | |||||||
|
||||||||||||||||||||||||||
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 5/07/20 Air Lease Corp 10-Q 3/31/20 61:8.1M Toppan Merrill Bridge/FA |
Document/Exhibit Description Pages Size
1: 10-Q Quarterly Report HTML 929K
2: EX-10.1 Material Contract HTML 33K
3: EX-10.2 Material Contract HTML 347K
4: EX-10.3 Material Contract HTML 471K
5: EX-10.4 Material Contract HTML 52K
6: EX-10.5 Material Contract HTML 113K
7: EX-31.1 Certification -- §302 - SOA'02 HTML 24K
8: EX-31.2 Certification -- §302 - SOA'02 HTML 24K
9: EX-32.1 Certification -- §906 - SOA'02 HTML 21K
10: EX-32.2 Certification -- §906 - SOA'02 HTML 21K
36: R1 Document and Entity Information HTML 76K
60: R2 Consolidated Balance Sheets HTML 87K
45: R3 Consolidated Balance Sheets (Parenthetical) HTML 48K
29: R4 Consolidated Statements of Income and HTML 106K
Comprehensive Income
37: R5 Consolidated Statements of Shareholders' Equity HTML 66K
61: R6 Consolidated Statement of Shareholders' Equity HTML 20K
(Parenthetical)
46: R7 Consolidated Statements of Cash Flows HTML 117K
30: R8 Consolidated Statements of Cash Flows HTML 20K
(Parenthetical)
35: R9 Company Background and Overview HTML 22K
55: R10 Basis of Preparation and Critical Accounting HTML 23K
Policies
49: R11 Recently Issued Accounting Standards HTML 21K
17: R12 Debt Financing HTML 72K
38: R13 Commitments and Contingencies HTML 68K
56: R14 Rental Income HTML 29K
50: R15 Net Earnings Per Share HTML 60K
18: R16 Fair Value Measurements HTML 25K
39: R17 Shareholders' Equity HTML 25K
54: R18 Stock-based Compensation HTML 81K
51: R19 Aircraft under management HTML 24K
23: R20 Flight Equipment Held for Sale HTML 20K
32: R21 Subsequent Events HTML 26K
57: R22 Debt Financing (Tables) HTML 69K
43: R23 Commitments and Contingencies (Tables) HTML 63K
24: R24 Rental Income (Tables) HTML 28K
33: R25 Net Earnings Per Share (Tables) HTML 58K
58: R26 Stock-based Compensation (Tables) HTML 78K
44: R27 Company Background and Overview (Details) HTML 22K
25: R28 Debt Financing (Details) HTML 98K
31: R29 Debt Financing - Maturities of Debt (Details) HTML 40K
41: R30 Commitments and Contingencies (Details) HTML 79K
21: R31 Rental Income (Details) HTML 34K
48: R32 Net Earnings Per Share (Details) HTML 63K
53: R33 Fair Value Measurements - Assets and Liabilities HTML 24K
Recurring and Non-recurring (Details)
40: R34 Fair Value Measurements - Debt Financing (Details) HTML 24K
20: R35 Shareholders' Equity Preferred stock (Details) HTML 71K
47: R36 Stock-based Compensation - Stock Options (Details) HTML 105K
52: R37 Stock-based Compensation - Stock Option Exercise HTML 39K
Price (Details)
42: R38 Stock-based Compensation - Restricted Stock HTML 52K
(Details)
19: R39 Aircraft under management (Details) HTML 54K
34: R40 Flight Equipment held for sale (Details) HTML 26K
28: R41 Subsequent Events (Details) HTML 29K
26: XML IDEA XML File -- Filing Summary XML 95K
59: XML XBRL Instance -- al-20200507x10q_htm XML 1.02M
16: EXCEL IDEA Workbook of Financial Reports XLSX 50K
12: EX-101.CAL XBRL Calculations -- al-20200507_cal XML 147K
13: EX-101.DEF XBRL Definitions -- al-20200507_def XML 462K
14: EX-101.LAB XBRL Labels -- al-20200507_lab XML 1.08M
15: EX-101.PRE XBRL Presentations -- al-20200507_pre XML 694K
11: EX-101.SCH XBRL Schema -- al-20200507 XSD 121K
22: JSON XBRL Instance as JSON Data -- MetaLinks 251± 387K
27: ZIP XBRL Zipped Folder -- 0001558370-20-005717-xbrl Zip 291K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM i 10-Q
i ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended i March 31, 2020
OR
i ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number i 001-35121
i AIR LEASE CORPORATION
(Exact name of registrant as specified in its charter)
i Delaware | | i 27-1840403 |
(State
or other jurisdiction of | | (I.R.S. Employer |
i 2000
Avenue of the Stars, Suite 1000N | | i 90067 |
(Address of principal executive offices) | | (Zip Code) |
Registrant’s telephone number, including area code: ( i 310) i 553-0555
Securities registered pursuant to Section 12(b) of the Act:
| | |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
i Class A Common Stock | i AL | i New York Stock Exchange |
i 6.150% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A | i AL PRA | i New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. i Yes ⌧ No ◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). i Yes ⌧ No ◻
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
| | |
i Large accelerated filer ☒ | | Accelerated filer ☐ |
Non-accelerated filer ☐ | | Smaller reporting company i ☐ |
Emerging growth company i ☐ | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes i ☐ No ☒
At May 6, 2020, there were i 113,643,462 shares of Air Lease Corporation’s Class A common stock outstanding.
Air Lease Corporation and Subsidiaries
Form 10-Q
For the Quarterly Period Ended March 31, 2020
TABLE OF CONTENTS
2
NOTE ABOUT FORWARD-LOOKING STATEMENTS
Statements in this quarterly report on Form 10-Q that are not historical facts may constitute “forward-looking statements,” including any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases. These statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed in such statements, including as a result of the following factors, among others:
| ● | the extent to which the coronavirus (“COVID-19”) pandemic and measures taken to contain its spread ultimately impact our business, results of operation and financial condition; |
| ● | our inability to obtain additional financing on favorable terms, if required, to complete the acquisition of sufficient aircraft as currently contemplated or to fund the operations and growth of our business; |
| ● | our inability to obtain refinancing prior to the time our debt matures; |
| ● | our inability to make acquisitions of, or lease, aircraft on favorable terms; |
| ● | our inability to sell aircraft on favorable terms or to predict the timing of such sales; |
| ● | impaired financial condition and liquidity of our lessees; |
| ● | changes in overall demand for commercial aircraft leasing and aircraft management services; |
| ● | deterioration of economic conditions in the commercial aviation industry generally; |
| ● | potential natural disasters and terrorist attacks and the amount of our insurance coverage, if any, relating thereto; |
| ● | increased maintenance, operating or other expenses or changes in the timing thereof; |
| ● | changes in the regulatory environment, including tariffs and other restrictions on trade; |
| ● | our inability to effectively oversee our managed fleet; |
| ● | the failure of any manufacturer to meet its contractual aircraft delivery obligations to us, including or as a result of technical or other difficulties with aircraft before or after delivery, resulting in our inability to deliver the aircraft to our lessees; |
| ● | other factors affecting our business or the business of our lessees and aircraft manufacturers or their suppliers that are beyond our or their control, including natural disasters, pandemics (such as COVID-19) and measures taken to contain its spread, and governmental actions; and |
| ● | the factors discussed under “Part I — Item 1A. Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2019, “Part II — Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and other SEC filings, including future SEC filings. |
The factors noted above and the risks included in our other SEC filings may be increased or intensified as a result of the COVID-19 pandemic, including if there is a resurgence of the COVID-19 virus after the initial outbreak subsides. The extent to which the COVID-19 pandemic ultimately impacts our business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted. See the risk factor in “Part II — Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, “The coronavirus (COVID-19) pandemic and related efforts to mitigate the pandemic have impacted our business, and the extent to which the COVID-19 pandemic and measures taken to contain its spread ultimately impact our business will depend on future developments, which are highly uncertain and are difficult to predict.” All forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations. You are therefore cautioned not to place undue reliance on such statements. Any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
3
PART I—FINANCIAL INFORMATION
ITEM 1. | FINANCIAL STATEMENTS |
Air Lease Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and par value amounts)
| | | | | | |
|
|
| ||||
|
| (unaudited) | ||||
Assets | | | | | | |
Cash and cash equivalents | | $ | i 732,719 | | $ | i 317,488 |
Restricted cash | |
| i 20,662 | |
| i 20,573 |
Flight equipment subject to operating leases | |
| i 21,976,429 | |
| i 21,286,154 |
Less accumulated depreciation | |
| ( i 2,754,068) | |
| ( i 2,581,817) |
| |
| i 19,222,361 | |
| i 18,704,337 |
Deposits on flight equipment purchases | |
| i 1,576,508 | |
| i 1,564,188 |
Other assets | |
| i 1,130,095 | |
| i 1,102,569 |
Total assets | | $ | i 22,682,345 | | $ | i 21,709,155 |
Liabilities and Shareholders’ Equity | | | | | | |
Accrued interest and other payables | | $ | i 491,251 | | $ | i 516,497 |
Debt financing, net of discounts and issuance costs | |
| i 14,414,621 | |
| i 13,578,866 |
Security deposits and maintenance reserves on flight equipment leases | |
| i 1,122,957 | |
| i 1,097,061 |
Rentals received in advance | |
| i 134,779 | |
| i 143,692 |
Deferred tax liability | |
| i 782,368 | |
| i 749,495 |
Total liabilities | | $ | i 16,945,976 | | $ | i 16,085,611 |
Shareholders’ Equity | | | | | | |
Preferred Stock, $ i i 0.01 / par value; i i 50,000,000 / shares authorized; i i 10,000,000 / shares of i i 6.150 / % Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A (aggregate liquidation preference of $ i i 250,000 / ) issued and outstanding at March 31, 2020 and December 31, 2019, respectively | |
| i 100 | |
| i 100 |
Class A common stock, $ i i 0.01 / par value; i i 500,000,000 / shares authorized; i 113,639,911 and i 113,350,267 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively | |
| i 1,136 | |
| i 1,134 |
Class B non-voting common stock, $ i i 0.01 / par value; authorized i i 10,000,000 / shares; i i no / shares issued or outstanding | |
| — | |
| — |
Paid-in capital | |
| i 2,775,640 | |
| i 2,777,601 |
Retained earnings | |
| i 2,962,368 | |
| i 2,846,106 |
Accumulated other comprehensive loss | | | ( i 2,875) | | | ( i 1,397) |
Total shareholders’ equity | | $ | i 5,736,369 | | $ | i 5,623,544 |
Total liabilities and shareholders’ equity | | $ | i 22,682,345 | | $ | i 21,709,155 |
(See Notes to Consolidated Financial Statements)
4
Air Lease Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands, except share and per share amounts)
| | | | | | | |
| | Three Months Ended | | ||||
| | | |||||
|
| 2020 |
| 2019 | | ||
| | (unaudited) |
| ||||
Revenues | | | | | | | |
Rental of flight equipment | | $ | i 496,687 | | $ | i 455,739 | |
Aircraft sales, trading and other | |
| i 14,700 | |
| i 10,312 | |
Total revenues | |
| i 511,387 | |
| i 466,051 | |
Expenses | | | | | | | |
Interest | |
| i 107,541 | |
| i 89,220 | |
Amortization of debt discounts and issuance costs | |
| i 10,528 | |
| i 8,540 | |
Interest expense | |
| i 118,069 | |
| i 97,760 | |
Depreciation of flight equipment | |
| i 188,895 | |
| i 159,471 | |
Selling, general and administrative | |
| i 28,322 | |
| i 29,702 | |
Stock-based compensation | |
| i 4,429 | |
| i 4,174 | |
Total expenses | |
| i 339,715 | |
| i 291,107 | |
Income before taxes | |
| i 171,672 | |
| i 174,944 | |
Income tax expense | |
| ( i 34,521) | |
| ( i 36,850) | |
Net income | | $ | i 137,151 | | $ | i 138,094 | |
Preferred stock dividends | | | ( i 3,844) | | | — | |
Net income available to common stockholders | | $ | i 133,307 | | $ | i 138,094 | |
| | | | | | | |
Other Comprehensive Loss: | | | | | | | |
Change in foreign currency translation adjustment | | | i 23,477 | | | — | |
Change from current period hedged transaction | | | ( i 25,386) | | | — | |
Total tax benefit on other comprehensive loss | | | i 431 | | | — | |
Other Comprehensive (loss)/income available for common stockholders, net of tax | | | ( i 1,478) | | | — | |
Total comprehensive income available for common stockholders | | $ | i 131,829 | | $ | i 138,094 | |
| | | | | | | |
Earnings per share of Class A and Class B common stock: | | | | | | | |
Basic | | $ | i 1.17 | | $ | i 1.24 | |
Diluted | | $ | i 1.17 | | $ | i 1.23 | |
Weighted-average shares outstanding | | | | | | | |
Basic | |
| i 113,471,945 | |
| i 111,018,279 | |
Diluted | |
| i 113,785,028 | |
| i 112,380,856 | |
| | | | | | | |
Dividends declared per share of Class A common stock | | $ | i 0.15 | | $ | i 0.13 | |
(See Notes to Consolidated Financial Statements)
5
Air Lease Corporation and Subsidiaries
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(In thousands, except share and per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Class B Non- | | | | | | | | Accumulated | | | | ||||
| | | | | | | Class A | | Voting | | | | | | | | Other | | | | |||||||
| | Preferred Stock | | Common Stock | | Common Stock | | Paid-in | | Retained | | Comprehensive | | | | ||||||||||||
(unaudited) |
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Earnings | | Income |
| Total | |||||||
Balance at December 31, 2019 |
| i 10,000,000 | | $ | i 100 | | i 113,350,267 | | $ | i 1,134 | | — | | $ | — | | $ | i 2,777,601 | | $ | i 2,846,106 | | $ | ( i 1,397) | | $ | i 5,623,544 |
Issuance of common stock upon vesting of restricted stock units and upon exercise of options |
| — | | | — | | i 480,978 | | | i 4 | | — | | | — | | | i 2,021 | | | — | | | — | | | i 2,025 |
Dividends declared on preferred stock | | — | | | — | | — | | | — | | — | | | — | | | — | | | ( i 3,844) | | | — | | | ( i 3,844) |
Stock-based compensation |
| — | | | — | | — | | | — | | — | | | — | | | i 4,429 | | | — | | | — | | | i 4,429 |
Cash dividends (declared $ i 0.15 per share of Class A common stock) |
| — | | | — | | — | | | — | | — | | | — | | | — | | | ( i 17,045) | | | — | | | ( i 17,045) |
Change in foreign currency translation adjustment and from current period hedged transactions | | — | | | — | | — | | | — | | — | | | — | | | — | | | — | | | ( i 1,478) | | | ( i 1,478) |
Tax withholding related to vesting of restricted stock units and exercise of stock options |
| — | | | — | | ( i 191,334) | | | ( i 2) | | — | | | — | | | ( i 8,411) | | | — | | | — | | | ( i 8,413) |
Net income | | — | | | — | | — | | | — | | — | | | — | | | — | | | i 137,151 | | | — | | | i 137,151 |
Balance at March 31, 2020 | | i 10,000,000 | | $ | i 100 | | i 113,639,911 | | $ | i 1,136 | | — | | $ | — | | $ | i 2,775,640 | | $ | i 2,962,368 | | $ | ( i 2,875) | | $ | i 5,736,369 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Class B Non- | | | | | | | | Accumulated | | | | ||||
| | | | | | | Class A | | Voting | | | | | | | | Other | | | | |||||||
| | Preferred Stock | | Common Stock | | Common Stock | | Paid-in | | Retained | | Comprehensive | | | | ||||||||||||
(unaudited) |
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Earnings | | Income |
| Total | |||||||
Balance at December 31, 2018 |
| — | | $ | — | | i 110,949,850 | | $ | i 1,110 | | — | | $ | — | | $ | i 2,474,238 | | $ | i 2,331,552 | | $ | — | | $ | i 4,806,900 |
Issuance of common stock upon vesting of restricted stock units and upon exercise of options |
| — | | | — | | i 263,218 | | | i 2 | | — | | | — | | | i 439 | | | — | | | — | | | i 441 |
Issuance of preferred stock | | i 10,000,000 | | | i 100 | | — | | | — | | — | | | — | | | i 242,141 | | | — | | | | | | i 242,241 |
Stock-based compensation |
| — | | | — | | — | | | — | | — | | | — | | | i 4,174 | | | — | | | — | | | i 4,174 |
Cash dividends (declared $ i 0.13 per share of Class A common stock) |
| — | | | — | | — | | | — | | — | | | — | | | — | | | ( i 14,445) | | | — | | | ( i 14,445) |
Tax withholding related to vesting of restricted stock units and exercise of stock options |
| — | | | — | | ( i 94,899) | | | ( i 1) | | — | | | — | | | ( i 3,587) | | | — | | | — | | | ( i 3,588) |
Net income |
| — | | | — | | — | | | — | | — | | | — | | | — | | | i 138,094 | | | — | | | i 138,094 |
Balance at March 31, 2019 |
| i 10,000,000 | | $ | i 100 | | i 111,118,169 | | $ | i 1,111 |
| — | | $ | — | | $ | i 2,717,405 | | $ | i 2,455,201 | | $ | — | | $ | i 5,173,817 |
(See Notes to Consolidated Financial Statements)
6
Air Lease Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| | | | | | |
| | Three Months Ended | ||||
| | |||||
|
| 2020 |
| 2019 | ||
|
| (unaudited) | ||||
Operating Activities | | | | | | |
Net income | | $ | i 137,151 | | $ | i 138,094 |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | |
Depreciation of flight equipment | |
| i 188,895 | |
| i 159,471 |
Stock-based compensation | |
| i 4,429 | |
| i 4,174 |
Deferred taxes | |
| i 33,302 | |
| i 36,825 |
Amortization of debt discounts and issuance costs | |
| i 10,528 | |
| i 8,540 |
Amortization of prepaid lease costs | | | i 10,454 | | | i 7,180 |
Gain on aircraft sales, trading and other activity | |
| ( i 5,554) | |
| ( i 17,167) |
Changes in operating assets and liabilities: | | | | | | |
Other assets | |
| ( i 88,411) | |
| ( i 93,788) |
Accrued interest and other payables | |
| ( i 47,858) | |
| i 20,789 |
Rentals received in advance | |
| ( i 8,913) | |
| ( i 2,869) |
Net cash provided by operating activities | |
| i 234,023 | |
| i 261,249 |
Investing Activities | | | | | | |
Acquisition of flight equipment under operating lease | |
| ( i 511,232) | |
| ( i 725,300) |
Payments for deposits on flight equipment purchases | |
| ( i 174,589) | |
| ( i 305,284) |
Proceeds from aircraft sales, trading and other activity | |
| i 65,070 | |
| i 247,264 |
Acquisition of aircraft furnishings, equipment and other assets | |
| ( i 51,576) | |
| ( i 111,162) |
Net cash used in investing activities | |
| ( i 672,327) | |
| ( i 894,482) |
Financing Activities | | | | | | |
Issuance of common stock upon exercise of options | |
| i 2,025 | |
| i 440 |
Cash dividends paid on Class A common stock | |
| ( i 17,003) | |
| ( i 14,421) |
Preferred dividends paid | | | ( i 3,844) | | | — |
Tax withholdings on stock-based compensation | |
| ( i 8,413) | |
| ( i 3,587) |
Net change in unsecured revolving facility | |
| i 495,000 | |
| i 225,000 |
Proceeds from debt financings | |
| i 1,449,873 | |
| i 995,779 |
Payments in reduction of debt financings | |
| ( i 1,093,268) | |
| ( i 896,098) |
Net proceeds from preferred stock issuance | | | - | | | i 242,241 |
Debt issuance costs | |
| ( i 2,902) | |
| ( i 2,455) |
Security deposits and maintenance reserve receipts | |
| i 50,083 | |
| i 73,145 |
Security deposits and maintenance reserve disbursements | |
| ( i 17,927) | |
| ( i 11,567) |
Net cash provided by financing activities | |
| i 853,624 | |
| i 608,477 |
Net increase/(decrease) in cash | |
| i 415,320 | |
| ( i 24,756) |
Cash, cash equivalents and restricted cash at beginning of period | |
| i 338,061 | |
| i 322,998 |
Cash, cash equivalents and restricted cash at end of period | | $ | i 753,381 | | $ | i 298,242 |
Supplemental Disclosure of Cash Flow Information | | | | | | |
Cash paid during the period for interest, including capitalized interest of $ i 13,261 and $ i 16,226 at March 31, 2020 and 2019, respectively | | $ | i 141,060 | | $ | i 137,481 |
Cash paid for income taxes | | $ | i 2,149 | | $ | i 25 |
Supplemental Disclosure of Noncash Activities | | | | | | |
Buyer furnished equipment, capitalized interest and deposits on flight equipment purchases applied to acquisition of flight equipment | | $ | i 191,318 | | $ | i 298,962 |
Cash dividends declared on Class A common stock, not yet paid | | $ | i 17,046 | | $ | i 14,445 |
(See Notes to Consolidated Financial Statements)
7
Air Lease Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
iNote 1. Company Background and Overview
Air Lease Corporation (the “Company”, “ALC”, “we”, “our” or “us”) is a leading aircraft leasing company that was founded by aircraft leasing industry pioneer, Steven F. Udvar-Házy. The Company is principally engaged in purchasing new commercial jet transport aircraft directly from manufacturers, such as The Boeing Company (“Boeing”) and Airbus S.A.S (“Airbus”). The Company leases these aircraft to airlines throughout the world with the intention to generate attractive returns on equity. As of March 31, 2020, the Company owned a fleet of i 300 aircraft in its operating lease portfolio, managed i 82 aircraft and had i 399 aircraft on order with aircraft manufacturers. In addition to its leasing activities, the Company sells aircraft from its operating lease portfolio to third parties, including other leasing companies, financial services companies, airlines and other investors. The Company also provides fleet management services to investors and owners of aircraft portfolios for a management fee.
/
iNote 2. Basis of Preparation and Critical Accounting Policies
The Company consolidates financial statements of all entities in which the Company has a controlling financial interest, including the accounts of any Variable Interest Entity in which the Company has a controlling financial interest and for which it is the primary beneficiary. All material intercompany balances are eliminated in consolidation. The accompanying Consolidated Financial Statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.
The accompanying unaudited Consolidated Financial Statements include all adjustments, consisting only of normal, recurring adjustments, which are in the opinion of management necessary to present fairly the Company’s financial position, results of operations and cash flows at March 31, 2020, and for all periods presented. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the operating results expected for the year ending December 31, 2020. These financial statements and related notes should be read in conjunction with the Consolidated Financial Statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2019.
iNote 3. Recently Issued Accounting Standards
On April 10, 2020, the Financial Accounting Standards Board (“FASB”) issued a question-and-answer document regarding accounting for lease concessions and other effects of the coronavirus (“COVID-19”) pandemic. The document clarifies that entities may elect to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under Leases ASC 842. The Company has chosen to continue accounting for lease concessions in accordance with lease modification accounting guidance in Topic 842.
8
Note 4. Debt Financing
iThe Company’s consolidated debt as of March 31, 2020 and December 31, 2019 (dollars in thousands):
| | | | | | |
|
| March 31, |
| |||
|
| 2020 |
| 2019 | ||
Unsecured | | | | | | |
Senior notes | | $ | i 12,834,333 | | $ | i 12,357,811 |
Term financings | |
| i 877,950 | |
| i 883,050 |
Revolving credit facility | |
| i 515,000 | |
| i 20,000 |
Total unsecured debt financing | |
| i 14,227,283 | |
| i 13,260,861 |
Secured | | | | | | |
Term financings | |
| i 322,320 | |
| i 428,824 |
Export credit financing | |
| i 29,947 | |
| i 31,610 |
Total secured debt financing | |
| i 352,267 | |
| i 460,434 |
| | | | | | |
Total debt financing | |
| i 14,579,550 | |
| i 13,721,295 |
Less: Debt discounts and issuance costs | |
| ( i 164,929) | |
| ( i 142,429) |
Debt financing, net of discounts and issuance costs | | $ | i 14,414,621 | | $ | i 13,578,866 |
iThe Company’s secured obligations as of March 31, 2020 and December 31, 2019 are summarized below (dollars in thousands):
| | | | | | |
|
| March 31, |
| |||
| | 2020 | | 2019 | ||
Nonrecourse | | $ | i 120,381 | | $ | i 128,460 |
Recourse | |
| i 231,886 | |
| i 331,974 |
Total secured debt financing | | $ | i 352,267 | | $ | i 460,434 |
Number of aircraft pledged as collateral | |
| i 12 | |
| i 15 |
Net book value of aircraft pledged as collateral | | $ | i 652,351 | | $ | i 890,693 |
Senior unsecured notes (including Medium-Term Note Program)
As of March 31, 2020, the Company had $ i 12.8 billion in senior unsecured notes outstanding. As of December 31, 2019, the Company had $ i 12.4 billion in senior unsecured notes outstanding.
During the three months ended March 31, 2020, the Company issued $ i 1.4 billion in aggregate principal amount of Medium-Term Notes comprised of (i) $ i 750.0 million due 2025 at a fixed rate of i 2.30% and (ii) $ i 650.0 million due 2030 at a fixed rate of i 3.00%.
Unsecured revolving credit facilities
The Company has an unsecured revolving credit facility with JPMorgan Chase Bank, N.A. as agent (the “Revolving Credit Facility”). During the quarter ended March 31, 2020, the Company increased the aggregate capacity of the Revolving Credit Facility by $ i 250.0 million to $ i 6.1 billion. The total amount outstanding under the Revolving Credit Facility was $ i 515.0 million and $ i 20.0 million as of March 31, 2020 and December 31, 2019, respectively.
As of March 31, 2020, borrowings under the Revolving Credit Facility will generally bear interest at either (a) LIBOR plus a margin of i 1.05% per year or (b) an alternative base rate plus a margin of i 0.05% per year, subject, in each case, to increases or decreases based on declines in the credit ratings for our debt. The Company is required to pay a facility fee of i 0.20% per year (also subject to increases or decreases based on declines in the credit ratings for the Company’s debt) in respect of total commitments under the Revolving Credit Facility. Borrowings under the Revolving Credit Facility are used to finance the Company’s working capital needs in the ordinary course of business and for other general corporate purposes.
On May 5, 2020, commitments totaling $ i 92.7 million of the Revolving Credit Facility matured. Lenders hold revolving commitments totaling approximately $ i 5.5 billion that mature on May 5, 2023, commitments totaling $ i 245.0
/9
million that mature on May 5, 2022 and commitments totaling $ i 5.0 million that mature on May 5, 2021. As of May 7, 2020, after giving effect to the commitments that matured on May 5, 2020, the aggregate capacity of the Revolving Credit Facility was approximately $ i 6.0 billion.
Maturities
iMaturities of debt outstanding as of March 31, 2020 are as follows (in thousands):
| | | |
Years ending December 31, |
| | |
2020 | | $ | i 319,372 |
2021 | |
| i 2,049,294 |
2022 | |
| i 2,751,269 |
2023 | |
| i 2,988,154 |
2024 | |
| i 1,534,552 |
Thereafter | |
| i 4,936,909 |
Total | | $ | i 14,579,550 |
iNote 5. Commitments and Contingencies
As of March 31, 2020, updated through May 7, 2020, the Company had commitments to acquire a total of i 399 new aircraft for delivery through 2026 as follows:
i
| | | | | | | | | | | | | | |
| | Estimated Delivery Years | ||||||||||||
Aircraft Type |
| 2020 |
| 2021 |
| 2022 |
| 2023 |
| 2024 |
| Thereafter |
| Total |
Airbus A220-300(1) | | — | | — | | i 8 | | i 13 | | i 10 | | i 19 | | i 50 |
Airbus A320/321neo(2) |
| i 13 |
| i 24 |
| i 26 |
| i 26 |
| i 29 |
| i 36 |
| i 154 |
Airbus A330-900neo |
| — |
| i 3 |
| i 7 |
| i 5 |
| — |
| — |
| i 15 |
Airbus A350-900/1000 |
| i 3 |
| i 3 |
| i 6 |
| i 2 |
| i 6 |
| — |
| i 20 |
Boeing 737-7/8/9 MAX |
| i 2 |
| i 28 |
| i 24 |
| i 42 |
| i 30 |
| — |
| i 126 |
Boeing 787-9/10 |
| i 8 |
| i 6 |
| i 8 |
| i 10 |
| i 2 |
| — |
| i 34 |
Total |
| i 26 |
| i 64 |
| i 79 |
| i 98 |
| i 77 |
| i 55 |
| i 399 |
| (1) | In addition to the Company’s commitments, as of March 31, 2020, the Company had options to acquire up to i 25 Airbus A220 aircraft. If exercised, deliveries of these aircraft are scheduled to commence in 2023 and continue through 2028. |
| (2) | Our Airbus A320/321neo aircraft orders include i 47 long-range variants and i 29 extra long-range variants. |
Pursuant to the Company’s purchase agreements with Boeing and Airbus for new aircraft, the Company and each manufacturer agree to contractual delivery dates for each aircraft ordered. These dates can change for a variety of reasons, and in the last several years manufacturing delays have significantly impacted the Company’s actual delivery dates. For several years, the Company has experienced delivery delays for certain of its Airbus orderbook aircraft, primarily the A321neo aircraft and, to a lesser extent, A330neo aircraft. The worldwide grounding of the Boeing 737 MAX aircraft (“737 MAX”) began on March 10, 2019, and remains in effect. As a result, Boeing has temporarily halted production and delivery of all 737 MAX aircraft and our new 737 MAX aircraft have been significantly delayed. Lifting of the grounding is subject to the approval of global regulatory authorities and the Company is unable to speculate as to when this may occur. Even after the grounding is lifted, Boeing’s ability to deliver 737 MAX aircraft may be impacted as a result of the COVID-19 pandemic. The Company is currently in discussions with Boeing regarding the mitigation of possible damages resulting from the grounding of, and the delivery delays associated with the 737 MAX aircraft that the Company owns or has on order, which could result in changes to the commitment table.
The ongoing COVID-19 pandemic has caused delivery delays and is expected to continue to cause delays of aircraft in the Company’s orderbook. As discussed in further detail in Note 13, “Subsequent Events,” the COVID-19 pandemic has resulted in numerous travel restrictions and business shutdowns, including a temporary closure of final aircraft assembly facilities for each of Boeing and Airbus. Given the dynamic nature of the ongoing COVID-19 pandemic, the Company is in ongoing discussions with Boeing and Airbus to determine the impact and duration of delivery delays. However, the Company is not yet able to determine the impact of the delivery delays, and as such, the delivery dates listed above could materially change.
/10
The aircraft purchase commitments discussed above also could be impacted by lease cancellation. The Company’s leases typically provide that the Company and the airline customer each have a cancellation right related to certain aircraft delivery delays. Our purchase agreements with Boeing and Airbus also generally provide that the Company and the manufacturer each have cancellation rights that typically are parallel with the Company’s cancellation rights in its leases. Our leases and our purchase agreements with Boeing and Airbus typically provide for cancellation rights starting at one year after the original contractual delivery date, regardless of cause.
iCommitments for the acquisition of these aircraft, calculated at an estimated aggregate purchase price (including adjustments for anticipated inflation) of approximately $ i 26.8 billion at March 31, 2020, updated through May 7, 2020, are due as follows (in thousands):
| | | |
Years ending December 31, |
| | |
2020 | | $ | i 2,206,538 |
2021 | |
| i 4,900,832 |
2022 | |
| i 6,519,111 |
2023 | |
| i 6,171,228 |
2024 | |
| i 4,456,237 |
Thereafter | |
| i 2,542,133 |
Total | | $ | i 26,796,079 |
The Company has made non-refundable deposits on the aircraft for which the Company has commitments to purchase of $ i i 1.6 / billion as of March 31, 2020 and December 31, 2019, respectively, which are subject to manufacturer performance commitments. If the Company is unable to satisfy its purchase commitments, the Company may be forced to forfeit its deposits. Further, the Company would be exposed to breach of contract claims by our lessees and manufacturers.
iNote 6. Rental Income
iAt March 31, 2020, minimum future rentals on non-cancellable operating leases of flight equipment in the Company’s fleet, which have been delivered as of March 31, 2020, are as follows (in thousands):
| | | |
Years ending December 31, |
| | |
2020 (excluding the three months ended March 31, 2020) | | $ | i 1,533,739 |
2021 | |
| i 1,987,225 |
2022 | |
| i 1,864,731 |
2023 | |
| i 1,666,500 |
2024 | |
| i 1,521,571 |
Thereafter | |
| i 5,656,114 |
Total | | $ | i 14,229,880 |
/
iNote 7. Earnings Per Share
Basic net earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock; however, potential common equivalent shares are excluded if the effect of including these shares would be anti-dilutive. The Company’s i two classes of common stock, Class A and Class B Non-Voting, have equal rights to dividends and income, and therefore, basic and diluted earnings per share are the same for each class of common stock. As of March 31, 2020, the Company did not have any Class B Non-Voting common stock outstanding.
/11
Diluted net earnings per share takes into account the potential conversion of stock options, restricted stock units, and warrants using the treasury stock method and convertible notes using the if-converted method. For the three months ended March 31, 2020, the Company did not exclude any potentially dilutive securities, whose effect would have been anti-dilutive, from the computation of diluted earnings per share. The Company excluded i 990,100 and i 940,470 shares related to restricted stock units for which the performance metric had yet to be achieved as of March 31, 2020 and 2019, respectively.
iThe following table sets forth the reconciliation of basic and diluted net earnings per share (in thousands, except share and per share amounts):
| | | | | | | |
| | Three Months Ended March 31, |
| ||||
|
| 2020 |
| 2019 | | ||
| | | | | | | |
Basic earnings per share: | | | | | | | |
Numerator | | | | | | | |
Net income | | $ | i 137,151 | | $ | i 138,094 | |
Preferred stock dividends | | | ( i 3,844) | | | — | |
Net income available to common stockholders | | $ | i 133,307 | | $ | i 138,094 | |
Denominator | | | | | | | |
Weighted-average common shares outstanding | |
| i 113,471,945 | |
| i 111,018,279 | |
Basic earnings per share | | $ | i 1.17 | | $ | i 1.24 | |
Diluted earnings per share: | | | | | | | |
Numerator | | | | | | | |
Net income | | $ | i 137,151 | | $ | i 138,094 | |
Preferred stock dividends | | | ( i 3,844) | | | — | |
Net income available to common stockholders | | $ | i 133,307 | | $ | i 138,094 | |
Denominator | | | | | | | |
Number of shares used in basic computation | |
| i 113,471,945 | |
| i 111,018,279 | |
Weighted-average effect of dilutive securities | |
| i 313,083 | |
| i 1,362,577 | |
Number of shares used in per share computation | |
| i 113,785,028 | |
| i 112,380,856 | |
Diluted earnings per share | | $ | i 1.17 | | $ | i 1.23 | |
iNote 8. Fair Value Measurements
Assets and Liabilities Measured at Fair Value on a Recurring and Non-recurring Basis
The Company had a cross-currency swap related to its Canadian dollar notes issued in December 2019. The fair value of the swap as a foreign currency exchange derivative is categorized as a Level 2 measurement in the fair value hierarchy and is measured on a recurring basis. As of March 31, 2020, the estimated fair value of the foreign currency exchange derivative liability was $ i 19.9 million. As of December 31, 2019, the estimated fair value of the foreign currency exchange derivative asset was $ i 5.4 million.
Financial Instruments Not Measured at Fair Values
The fair value of debt financing is estimated based on the quoted market prices for the same or similar issues, or on the current rates offered to the Company for debt of the same remaining maturities, which would be categorized as a Level 2 measurement in the fair value hierarchy. The estimated fair value of debt financing as of March 31, 2020 was approximately $ i 13.1 billion compared to a book value of $ i 14.6 billion. The estimated fair value of debt financing as of December 31, 2019 was $ i 14.1 billion compared to a book value of $ i 13.7 billion.
The following financial instruments are not measured at fair value on the Company’s Consolidated Balance Sheets at March 31, 2020, but require disclosure of their fair values: cash and cash equivalents and restricted cash. The estimated fair value of such instruments at March 31, 2020 and December 31, 2019 approximates their carrying value as reported on the Consolidated Balance Sheets. The fair value of all these instruments would be categorized as Level 1 in the fair value hierarchy.
/
12
Note 9. Shareholders’ Equity
The Company was authorized to issue i i 500,000,000 / shares of Class A common stock, $ i i 0.01 / par value, at March 31, 2020 and December 31, 2019. As of March 31, 2020 and December 31, 2019, the Company had i 113,639,911 and i 113,350,267 Class A common shares issued and outstanding, respectively. The Company did not have any shares of Class B non-voting common stock, $ i i 0.01 / par value, issued or outstanding as of March 31, 2020 and December 31, 2019.
The Company was authorized to issue i i 50,000,000 / shares of preferred stock, $ i i 0.01 / par value, at March 31, 2020 and December 31, 2019. As of March 31, 2020 and December 31, 2019, the Company had i 10,000,000 shares of preferred stock issued and outstanding with an aggregate liquidation preference of $ i 250.0 million.
On March 5, 2019, the Company issued i 10,000,000 shares of i 6.150% Fixed-to-Floating Non-Cumulative Perpetual Preferred Stock, Series A (the “Series A Preferred Stock”), $ i 0.01 par value, with a liquidation preference of $ i 25.00 per share. The Company will pay dividends on the Series A Preferred Stock only when, as and if declared by the board of directors. Dividends will accrue, on a non-cumulative basis, on the stated amount of $ i 25.00 per share at a rate per annum equal to: (i) i 6.150% during the first i five years and payable quarterly in arrears beginning on June 15, 2019, and (ii) three-month LIBOR plus a spread of i 3.650% per annum from March 15, 2024, reset quarterly and payable quarterly in arrears beginning on June 15, 2024.
The Company may redeem shares of the Series A Preferred Stock at its option, in whole or in part, from time to time, on or after March 15, 2024, for cash at a redemption price equal to $ i 25.00 per share, plus any declared and unpaid dividends to, but excluding, the redemption date, without accumulation of any undeclared dividends. The Company may also redeem shares of the Series A Preferred Stock at the Company’s option under certain other limited conditions.
/
iNote 10. Stock-based Compensation
On May 7, 2014, the stockholders of the Company approved the Air Lease Corporation 2014 Equity Incentive Plan (the “2014 Plan”). Upon approval of the 2014 Plan, i no new awards may be granted under the Amended and Restated 2010 Equity Incentive Plan (the “2010 Plan”). As of March 31, 2020, the number of stock options (“Stock Options”) and restricted stock units (“RSUs”) authorized under the 2014 Plan is approximately i 4,948,064. Stock Options are generally granted for a term of i 10 years and vest ratably over a i three-year period. The Company has issued RSUs with i four different vesting criteria: those RSUs that vest based on the attainment of book value goals, those RSUs that vest based on the attainment of Total Shareholder Return (“TSR”) goals, time based RSUs that vest ratably over a time period of i three years and RSUs that cliff-vest at the end of a one or i two year period. The Company has two types of book value RSUs; those that vest ratably over a three-year period if the performance condition has been met, and those that vest at the end of a i three-year period if the performance condition has been met. For the book value RSUs that cliff-vest at the end of a three-year period, the number of shares that will ultimately vest will range from i 0% to i 200% of the RSUs initially granted depending on the percentage change in the Company’s book value per share at the end of the vesting period. At each reporting period, the Company reassesses the probability of the performance condition being achieved and a stock-based compensation expense is recognized based upon management’s assessment. Book value RSUs for which the performance metric has not been met are forfeited. The TSR RSUs vest at the end of a i three-year period. The number of TSR RSUs that will ultimately vest is based upon the percentile ranking of the Company’s TSR among a peer group. The number of shares that will ultimately vest will range from i 0% to i 200% of the RSUs initially granted depending on the extent to which the TSR metric is achieved.
The Company recorded $ i 4.4 million and $ i 4.2 million of stock-based compensation expense related to RSUs for the three months ended March 31, 2020 and 2019, respectively.
/13
Stock Options
A summary of stock option activity for the three months ended March 31, 2020 follows:
i
| | | | | | | | | | |
|
| |
| | |
| Remaining |
| Aggregate | |
| | | | Exercise | | Contractual Term | | Intrinsic Value | ||
|
| Shares |
| Price |
| (in years) |
| (in thousands)(1) | ||
Balance at December 31, 2019 |
| i 364,153 | | $ | i 22.90 |
| i 0.75 |
| $ | i 8,965 |
Granted |
| — | | $ | — |
| — | | $ | — |
Exercised |
| ( i 101,200) | | $ | i 20.00 |
| — |
| $ | i 1,460 |
Forfeited/canceled |
| — | | $ | — |
| — |
| $ | — |
Balance at March 31, 2020 |
| i 262,953 | | $ | i 24.02 |
| i 0.62 |
| $ | i 306 |
Vested and exercisable as of March 31, 2020 |
| i 262,953 | | $ | i 24.02 |
| i 0.62 |
| $ | i 306 |
| (1) | The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of our Class A common stock as of the respective date. |
All of the Company’s outstanding employee stock options had fully vested as of June 30, 2013. As of March 31, 2020 there were i no unrecognized compensation costs related to outstanding stock options. For the three months ended March 31, 2020 and 2019 there were i no stock-based compensation expenses related to Stock Options.
The following table summarizes additional information regarding outstanding exercisable and vested stock options at March 31, 2020:
i
| | | | |
| | | | |
| | Stock Options Exercisable | ||
| | and Vested | ||
|
| |
| Weighted- |
| | | | Average |
| | Number of | | Remaining Life |
Range of exercise prices | | Shares |
| (in years) |
$ i 20.00 |
| i 142,953 |
| i 0.24 |
$ i 28.80 |
| i 120,000 |
| i 1.07 |
$ i 20.00 - $ i 28.80 |
| i 262,953 |
| i 0.62 |
Restricted Stock Units
Compensation cost for stock awards is measured at the grant date based on fair value and recognized over the vesting period. The fair value of book value and time based RSUs is determined based on the closing market price of the Company’s Class A common stock on the date of grant, while the fair value of TSR RSUs is determined at the grant date using a Monte Carlo simulation model. Included in the Monte Carlo simulation model were certain assumptions regarding a number of highly complex and subjective variables, such as expected volatility, risk-free interest rate and expected dividends. To appropriately value the award, the risk-free interest rate is estimated for the time period from the valuation date until the vesting date and the historical volatilities were estimated based on a historical timeframe equal to the time from the valuation date until the end date of the performance period.
During the three months ended March 31, 2020, the Company granted i 527,246 RSUs of which i 143,237 are TSR RSUs. The following table summarizes the activities for our unvested RSUs for the three months ended March 31, 2020:
i
| | | | | |
| | Unvested Restricted Stock Units | |||
| | | | Weighted-Average | |
| | Number of | | Grant-Date | |
|
| Shares |
| Fair Value | |
Unvested at December 31, 2019 |
| i 1,254,904 | | $ | i 43.62 |
Granted |
| i 527,246 | | $ | i 45.85 |
Vested |
| ( i 379,778) | | $ | i 47.54 |
Forfeited/canceled |
| — | | $ | — |
Unvested at March 31, 2020 |
| i 1,402,372 | | $ | i 43.40 |
Expected to vest after March 31, 2020 |
| i 1,499,715 | | $ | i 43.26 |
14
As of March 31, 2020, there was $ i 41.7 million of unrecognized compensation cost related to unvested stock-based payments granted to employees. Total unrecognized compensation cost will be recognized over a weighted-average remaining period of i 2.14 years.
iNote 11. Aircraft Under Management
As of March 31, 2020, we managed i 82 aircraft across i three aircraft management platforms. We managed i 52 aircraft through our Thunderbolt platform, i 26 aircraft through the Blackbird investment funds and i four on behalf of a financial institution.
We managed i 26 aircraft on behalf of third-party investors, through i two investment funds, Blackbird I and Blackbird II. These funds invest in commercial aircraft and lease them to airlines throughout the world. We provide management services to these funds for a fee. As of March 31, 2020, the Company's non-controlling interests in each fund is i 9.5% and are accounted for under the equity method of accounting. The Company’s investment in these funds aggregated $ i 48.5 million and $ i 46.5 million as of March 31, 2020 and December 31, 2019, respectively, and is included in Other assets on the Consolidated Balance Sheets. We continue to source aircraft investment opportunities for Blackbird II. As of March 31, 2020, Blackbird II has remaining equity capital commitments to acquire up to approximately $ i 1.2 billion in aircraft assets, for which we have committed to fund up to $ i 29.1 million related to these potential investments.
Additionally, we continue to manage aircraft that we sell through our Thunderbolt platform. As of March 31, 2020, we managed i 52 aircraft sold across i three separate transactions. We have non-controlling interests in i two of these entities of approximately i 5.0%, which are accounted for under the cost method of accounting. During the period ending March 31, 2020, we completed the sale of i three aircraft from our operating lease portfolio through our Thunderbolt platform. The Company’s total investment in aircraft sold through our Thunderbolt platform was $ i i 9.9 / million as of March 31, 2020 and December 31, 2019, and is included in Other assets on the Consolidated Balance Sheets.
/ iNote 12. Flight Equipment Held for Sale
As of March 31, 2020, we had i five aircraft, with a carrying value of $ i 175.1 million, which were held for sale and included in Other assets on the Consolidated Balance Sheets. These aircraft will be sold through our Thunderbolt platform and we expect the sale of all i five aircraft to be completed in 2020. We cease recognition of depreciation expense once an aircraft is classified as held for sale. As of December 31, 2019, we had i eight aircraft classified as held for sale, with a carrying value of $ i 249.6 million.
/ iNote 13. Subsequent Events
Dividend Distribution
On May 6, 2020, our board of directors approved a quarterly cash dividend of $ i 0.15 per share on our outstanding Class A common stock. The dividend will be paid on July 9, 2020 to holders of record of our Class A common stock as of June 5, 2020. Our board of directors also approved a cash dividend of $ i 0.384375 per share on our outstanding Series A Preferred Stock, which will be paid on June 15, 2020 to holders of record of our Series A Preferred Stock as of May 31, 2020.
COVID-19 Pandemic
On January 30, 2020, the spread of the COVID-19 outbreak was declared a Public Health Emergency of International Concern by WHO. On March 11, 2020, WHO characterized the COVID-19 outbreak as a pandemic. The COVID-19 pandemic has resulted in governmental authorities around the world implementing numerous measures to try to contain the virus, such as travel bans and restrictions, border closures, quarantines, shelter-in-place or total lock-down orders and business limitations and shutdowns (subject to exceptions for certain essential operations and businesses). These measures, coupled with a decrease in consumer spending on travel as a result of COVID-19, have materially impacted airline traffic and operations throughout the world, including for our airline customers. It is unclear how long these restrictions will remain in place and they may remain in place in some form for an extended period of time. Aircraft manufacturers and suppliers also have been impacted, including causing the temporary closure of Boeing and Airbus’ final assembly facilities and also closures of various facilities across their supply chain. As the virus has spread in March and April, the relatively limited impacts the Company saw in Asia in the early part of the year have accelerated and are now occurring throughout the rest of the world, with a rapid decline in global air travel.
/15
Beginning in the first quarter of 2020 and continuing in the second quarter, the Company began receiving requests from most of its customers for accommodations such as deferral of lease payments or other lease concessions. The Company evaluates such requests on a case-by-case basis and has worked out accommodation arrangements with approximately i 46% of its lessees, generally in the form of partial lease deferrals for payments due in the first and second quarter of 2020, typically with a short-term repayment period, with the majority of the deferrals repaid by the end of this year. In many cases, lease extensions were also negotiated as part of the deferral accommodations. The Company remains in active discussions with its other airline customers and may continue to provide accommodation arrangements on a case-by-case basis.
While lease deferrals may delay our receipt of cash, we generally recognize the lease revenue during the period even if a deferral is provided to the lessee, unless we determine collection is not reasonably assured. We monitor all lessees with past due lease payments and discuss relevant operational and financial issues facing those lessees in order to determine an appropriate course of action. In addition, if collection is not reasonably assured, we will not recognize rental income for amounts due under our lease contracts and will recognize revenue for such lessees on a cash basis.
Given the dynamic nature of this situation, the Company cannot reasonably estimate the impacts of COVID-19 on its business, results of operations and financial condition for the foreseeable future.
16
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read together with our Consolidated Financial Statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Overview
Air Lease Corporation (the “Company”, “ALC”, “we”, “our” or “us”) is a leading aircraft leasing company that was founded by aircraft leasing industry pioneer, Steven F. Udvar-Házy. We are principally engaged in purchasing new commercial jet transport aircraft directly from aircraft manufacturers, such as The Boeing Company (“Boeing”) and Airbus S.A.S. (“Airbus”), and leasing those aircraft to airlines throughout the world with the intention to generate attractive returns on equity. In addition to our leasing activities, we sell aircraft from our operating lease portfolio to third-parties, including other leasing companies, financial services companies, airlines and other investors. We also provide fleet management services to investors and owners of aircraft portfolios for a management fee. Our operating performance is driven by the growth of our owned fleet, the terms of our leases, the interest rates on our debt, and the aggregate amount of our indebtedness, supplemented by the gains from our aircraft sales, trading and other activities and our management fees.
COVID-19 Pandemic
On January 30, 2020, the spread of the COVID-19 outbreak was declared a Public Health Emergency of International Concern by the World Health Organization (“WHO”). On March 11, 2020, WHO characterized the COVID-19 outbreak as a pandemic. The COVID-19 pandemic has resulted in governmental authorities around the world implementing numerous measures to try to contain the virus, such as travel bans and restrictions, border closures, quarantines, shelter-in-place or total lock-down orders and business limitations and shutdowns (subject to exceptions for certain essential operations and businesses). It is unclear how long these restrictions will remain in place and they may remain in place in some form for an extended period of time. These measures, coupled with a decrease in consumer spending on travel as a result of COVID-19, have materially impacted airline traffic and operations throughout the world, including for our airline customers. Aircraft manufacturers and suppliers also have been impacted, including causing the temporary closure of Boeing and Airbus’ final assembly facilities and also closures of various facilities across their supply chain.
In January and February of 2020, the primary impact of the virus was limited to Asia. As the virus has spread in March and April, the relatively limited impacts we saw in Asia in the early part of the year have accelerated and are now occurring throughout the rest of the world, with a rapid decline in global air travel.
Beginning in the first quarter of 2020 and continuing in the second quarter, we began receiving requests from our customers for accommodations such as deferral of lease payments or other lease concessions. As of May 7, 2020, most of our lessees have requested some form of rental relief. We evaluate such requests on a case-by-case basis and have worked out accommodation arrangements with approximately 46% of our lessees, generally in the form of partial lease deferrals for payments due in the first and second quarter of 2020, typically with a short-term repayment period, with the majority of the deferrals repaid by the end of this year. In many cases, lease extensions were also negotiated as part of the deferral accommodations. As of May 7, 2020, the Company has agreed to defer approximately $124.6 million in lease payments which represents approximately 6% of our total revenue for fiscal year 2019. We remain in active discussions with our other airline customers and expect to continue to provide accommodation arrangements on a case-by-case basis.
Our collection rate during the first quarter of 2020 and the month of April 2020 was 90% and 86%, respectively. Collection rate is defined as the sum of cash collected from lease rentals and maintenance reserves, and includes cash recovered from outstanding receivables from previous periods, as a percentage of the total contracted receivables due for the period. The collection rate is calculated after giving effect to lease deferral arrangements made as of May 7, 2020. Our lease utilization rate for the period ended March 31, 2020 was 99.7%. For the month of April 2020, our lease utilization rate was 99.8%. The lease utilization rate is calculated based on the number of days each aircraft was subject to a lease or letter of intent during the period, weighted by the net book value of the aircraft. It is possible that our collection rate or lease utilization rate could decline in the near future as a result of accommodation arrangements we
17
have made or could make in the future, including providing additional lease concessions to airline customers already receiving a concession or if our airline customers do not make their lease payments even absent lease concessions.
Depending on the severity and longevity of the COVID-19 pandemic, the efforts taken to reduce its spread and the possibility of a resurgence of COVID-19, some of our lessees may return aircraft to us before the return date in their lease agreement or experience insolvency or initiate bankruptcy or similar proceedings that result in aircraft being returned to us. If this occurs, we may not be able to reposition the aircraft with other airlines as quickly as we have historically been able to do or we may incur increased costs in repositioning such aircraft. As a result, our revenues and collection rates would decline. In addition, as of March 31, 2020, we had commitments to purchase 399 aircraft from Airbus and Boeing for delivery through 2026, and we had placed approximately 84% of our committed order book on long-term leases for aircraft delivering through 2022. The impact of the COVID-19 pandemic on airlines could result in the cancellation of leases that we have in place for our committed orderbook or a decline in the number of aircraft in our order book that we can place into leases prior to their delivery. If we are not able to place aircraft from our orderbook into leases prior to delivery, it may cause a downward pressure on our lease rates or require us to sell aircraft in our fleet sooner than anticipated.
COVID-19 has disrupted some of our operations. While our employees are working remotely, due to travel restrictions and business limitations and shutdowns, some transitions of our aircraft from one lessee to another lessee have been delayed. Some planned aircraft sales have been delayed or terminated as a result of business limitations and shutdowns. We expect these disruptions to continue and they could worsen. We also expect that demand for used aircraft will decline in the near-term and that we will sell fewer used aircraft in 2020 and perhaps 2021 than we initially planned to sell.
We also experienced delivery delays related to COVID-19. While the commitment table in Note 5, “Commitments and Contingencies” above and the discussion of “Our Fleet” below reflects our current delivery expectations, we are in ongoing discussions with Boeing and Airbus to determine the extent and duration of delivery delays. The delays could result in a cancellation of leases for those aircraft. Pursuant to such contractual provisions, we are in discussions with lessees who are considering cancelling a small number of our 737 MAX leases with us. Given the dynamic nature of the ongoing COVID-19 pandemic, we are not yet able to determine the full impact of the delivery delays, and we expect such delivery dates could materially change, and as a result, our future growth will be negatively impacted.
COVID-19 has caused disruption in the financial markets and have caused volatility and uncertainty in the bond market. We finance the purchase of aircraft and our business with available cash balances, internally generated funds, including through aircraft sales and trading activity, and debt financings. As of March 31, 2020, we had an undrawn balance of $5.6 billion under our committed unsecured revolving credit facility with JPMorgan Chase Bank, N.A. as agent, which reflects our recent increase in our facility size by $250.0 million in March 2020. We believe we continue to have access to the unsecured debt capital markets, although we have not accessed this market since January 2020 when we issued $1.4 billion in aggregate principal amount of Medium-Term Notes. We could also seek to enter into more secured debt financings, including financings supported through the Export-Import Bank of the United States or other export credit agencies (“ECAs”) to fund future aircraft deliveries from our orderbook. Our liquidity is discussed below in more detail under “Liquidity and Capital Resources.”
While we cannot currently reasonably estimate the extent to which the COVID-19 pandemic and measures taken to contain its spread will ultimately impact our business, we believe the airline industry will eventually recover and aircraft travel will return to historical levels over the long term. We believe we are well positioned to offer solutions for airlines, because we can offer the ability to lease younger, more fuel-efficient aircraft at a time when airlines will be focused on managing costs.
As the COVID-19 pandemic and efforts to mitigate its spread continue, we expect our business, results of operations and financial condition to be negatively impacted, and could have a larger impact on our results of operations for the second quarter and remainder of this year than has been reflected in our first quarter results for 2020. Depending on the severity and longevity of the COVID-19 pandemic, the related efforts taken to reduce its spread, and the possibility of a resurgence of COVID-19, the COVID-19 pandemic could have a material, adverse impact on future revenue growth, liquidity and cash flow. Given the dynamic nature of this situation, we cannot reasonably estimate the impacts of the COVID-19 pandemic on our business, results of operations and financial condition for the foreseeable future.
18
First Quarter Overview
During the three months ended March 31, 2020, we purchased and took delivery of eight aircraft from our new order pipeline, purchased one aircraft in the secondary market and sold three aircraft from our held for sale portfolio ending the period with a total of 300 aircraft with a net book value of $19.2 billion. The weighted average lease term remaining on our operating lease portfolio was 7.2 years and the weighted average age of our fleet was 3.7 years as of March 31, 2020. Our fleet grew by 2.8% based on net book value of $19.2 billion as of March 31, 2020, compared to $18.7 billion as of December 31, 2019. In addition, we had a managed fleet of 82 aircraft as of March 31, 2020, compared to a managed fleet of 83 aircraft as of December 31, 2019. We had a globally diversified customer base comprised of 108 airlines in 61 countries. As of May 7, 2020, all aircraft, except for two aircraft, in our operating lease portfolio, were subject to letters of intent or lease agreements.
During the first three months of 2020, we entered into supplemental agreements with Boeing to convert nine Boeing 737 MAX to three Boeing 787-9 aircraft. As of March 31, 2020, we had commitments to purchase 399 aircraft from Airbus and Boeing for delivery through 2026, with an estimated aggregate commitment of $26.8 billion. We ended the first quarter of 2020 with $28.8 billion in committed minimum future rental payments and placed approximately 84% of our committed order book on long-term leases for aircraft delivering through 2022. This includes $14.2 billion in contracted minimum rental payments on the aircraft in our existing fleet and $14.6 billion in minimum future rental payments related to aircraft which will be delivered during the remainder of 2020 through 2024.
In November 2019, we entered into an agreement to sell 19 aircraft through our Thunderbolt platform to investors. Our Thunderbolt platform facilitates the sale of mid-life aircraft to investors while allowing to continue the management of these aircraft for a fee. Through this transaction, we retained a non-controlling interest of approximately 5.0% in the entity. During the three months ended March 31, 2020, we sold a total of three aircraft into our Thunderbolt platform for proceeds of approximately $65.2 million. As of March 31, 2020, we completed the sales of 14 of the 19 aircraft and expect to complete the sale of the remaining five aircraft in 2020. As of March 31, 2020 these five aircraft were classified as held for sale and included in Other assets on our Consolidated Balance Sheets
During the first three months of 2020, we issued $1.4 billion in Medium-Term Notes, with maturities ranging between 2025 and 2030 and that bear interest at fixed rates between 2.30% and 3.00%. In addition, we increased the aggregate capacity of our committed unsecured revolving credit facility by $250.0 million to $6.1 billion, ending the quarter with total liquidity of $6.3 billion. We ended the first quarter of 2020 with total debt outstanding, net of discounts and issuance costs, of $14.4 billion, of which 86.4% was at a fixed rate and 97.6% of which was unsecured. Our composite cost of funds was 3.16% as of March 31, 2020.
Our total revenues for the quarter ended March 31, 2020 increased by 9.7% to $511.4 million, compared to the quarter ended March 31, 2019. This increase was principally driven by the continued growth of our fleet, partially offset by a lower amount of end of lease revenue recognized as compared to the same period in 2019. Our net income available to common stockholders for the quarter ended March 31, 2020 was $133.3 million compared to $138.1 million for the quarter ended March 31, 2019. Our diluted earnings per share for the quarter ended March 31, 2020 was $1.17 compared to $1.23 for the quarter ended March 31, 2019. The decrease in net income available to common stockholders in the first quarter of 2020 as compared to 2019 was primarily due to the decrease in the amount of end of lease revenue recognized.
Our adjusted net income before income taxes excludes the effects of certain non-cash items, one-time or non-recurring items, that are not expected to continue in the future and certain other items. Our adjusted net income before income taxes for the three months ended March 31, 2020 was $182.8 million or $1.61 per diluted share, compared to $187.7 million or $1.67 per diluted share for the three months ended March 31, 2019. The decrease in our adjusted net income before income taxes was primarily due to the decrease in the amount of end of lease revenue recognized. Our adjusted pre-tax profit margin for the three months ended March 31, 2020 was 35.7% compared to 40.3% for the three months ended March 31, 2019. Adjusted net income before income taxes, adjusted pre-tax profit margin and adjusted diluted earnings per share before income taxes are measures of financial and operational performance that are not defined by U.S. Generally Accepted Accounting Principles (“GAAP”). See Note 1 under the “Results of Operations” table for a discussion of adjusted net income before income taxes, adjusted pre-tax profit margin and adjusted diluted earnings per share before income taxes as non-GAAP measures and reconciliation of these measures to net income available to common stockholders.
19
Our Fleet
Portfolio metrics of our fleet as of March 31, 2020 and December 31, 2019 are as follows:
| | | | | | |
|
|
| ||||
| | | | | | |
Aggregate fleet net book value |
| $ | 19.2 billion | | $ | 18.7 billion |
Weighted-average fleet age(1) |
| | 3.7 years | | | 3.5 years |
Weighted-average remaining lease term(1) |
| | 7.2 years | | | 7.2 years |
| | | | | | |
Owned fleet(2) |
| | 300 | | | 292 |
Managed fleet(2) |
| | 82 | | | 83 |
Aircraft on order | | | 399 | | | 413 |
Aircraft purchase options(3) | | | 25 | | | 70 |
Total | | | 806 | | | 858 |
| | | | | | |
Current fleet contracted rentals | | $ | 14.2 billion | | $ | 14.1 billion |
Committed fleet rentals | | $ | 14.6 billion | | $ | 15.0 billion |
Total committed rentals | | $ | 28.8 billion | | $ | 29.1 billion |
| (1) | Weighted-average fleet age and remaining lease term calculated based on net book value. |
| (2) | As of March 31, 2020 and December 31, 2019, we had five and eight aircraft, respectively, classified as flight equipment held for sale which are included in Other assets on the Consolidated Balance Sheet. All of these aircraft are excluded from the owned fleet count and included in our managed fleet count. |
| (3) | As of March 31, 2020, we had options to acquire up to 25 Airbus A220 aircraft. As of December 31, 2019, we had options to acquire up to 45 Boeing 737-8 MAX aircraft, that have since expired without being exercised, and up to 25 Airbus A220 aircraft. |
The following table sets forth the net book value and percentage of the net book value of our flight equipment subject to operating lease in the indicated regions based on each airline’s principal place of business as of March 31, 2020 and December 31, 2019 (in thousands, except percentages):
| | | | | | | | | | | |
| | |
| ||||||||
| | Net Book | | | | Net Book | | |
| ||
Region |
| Value |
| % of Total |
| Value |
| % of Total |
| ||
Europe | | $ | 5,624,068 |
| 29.2 | % | $ | 5,438,775 |
| 29.0 | % |
Asia (excluding China) | |
| 5,316,199 |
| 27.7 | % |
| 4,985,525 | | 26.7 | % |
China | | | 2,878,482 | | 15.0 | % | | 2,930,752 |
| 15.7 | % |
The Middle East and Africa | |
| 2,326,758 |
| 12.1 | % |
| 2,242,215 |
| 12.0 | % |
Central America, South America and Mexico | |
| 1,106,317 |
| 5.8 | % |
| 1,116,814 |
| 6.0 | % |
U.S. and Canada | |
| 986,031 |
| 5.1 | % |
| 996,398 |
| 5.3 | % |
Pacific, Australia and New Zealand | |
| 984,506 |
| 5.1 | % |
| 993,858 |
| 5.3 | % |
Total | | $ | 19,222,361 |
| 100.0 | % | $ | 18,704,337 |
| 100.0 | % |
20
The following table sets forth the number of aircraft we owned by aircraft type as of March 31, 2020 and December 31, 2019:
| | | | | | | | | |
| | |
| ||||||
| | Number of | | | | Number of | | |
|
Aircraft type |
| Aircraft |
| % of Total |
| Aircraft |
| % of Total |
|
Airbus A319-100 | | 1 | | 0.3 | % | 1 | | 0.3 | % |
Airbus A320-200 |
| 21 |
| 7.0 | % | 21 |
| 7.2 | % |
Airbus A320-200neo | | 15 | | 5.0 | % | 13 | | 4.5 | % |
Airbus A321-200 |
| 28 |
| 9.3 | % | 28 |
| 9.6 | % |
Airbus A321-200neo | | 39 | | 13.1 | % | 35 | | 12.0 | % |
Airbus A330-200 |
| 12 |
| 4.0 | % | 12 |
| 4.1 | % |
Airbus A330-300 |
| 8 |
| 2.7 | % | 7 |
| 2.4 | % |
Airbus A330-900neo | | 7 | | 2.3 | % | 7 | | 2.4 | % |
Airbus A350-900 | | 10 | | 3.3 | % | 10 | | 3.4 | % |
Boeing 737-700 |
| 4 |
| 1.3 | % | 4 |
| 1.4 | % |
Boeing 737-800 |
| 85 |
| 28.4 | % | 85 |
| 29.1 | % |
Boeing 737-8 MAX | | 15 | | 5.0 | % | 15 | | 5.1 | % |
Boeing 767-300ER |
| — |
| — | % | 1 |
| 0.3 | % |
Boeing 777-200ER |
| 1 |
| 0.3 | % | 1 |
| 0.3 | % |
Boeing 777-300ER |
| 24 |
| 8.0 | % | 24 |
| 8.2 | % |
Boeing 787-9 | | 23 | | 7.7 | % | 23 | | 8.0 | % |
Boeing 787-10 | | 6 | | 2.0 | % | 4 | | 1.4 | % |
Embraer E190 |
| 1 |
| 0.3 | % | 1 |
| 0.3 | % |
Total |
| 300 |
| 100.0 | % | 292 |
| 100.0 | % |
As of March 31, 2020, updated through May 7, 2020, the Company had commitments to acquire a total of 399 new aircraft for delivery through 2026 as follows:
| | | | | | | | | | | | | | |
| | Estimated Delivery Years | ||||||||||||
Aircraft Type |
| 2020 |
| 2021 |
| 2022 |
| 2023 |
| 2024 |
| Thereafter |
| Total |
Airbus A220-300(1) |
| — |
| — |
| 8 |
| 13 |
| 10 |
| 19 |
| 50 |
Airbus A320/321neo(2) |
| 13 |
| 24 |
| 26 |
| 26 |
| 29 |
| 36 |
| 154 |
Airbus A330-900neo |
| — |
| 3 |
| 7 |
| 5 |
| 0 |
| — |
| 15 |
Airbus A350-900/1000 |
| 3 |
| 3 |
| 6 |
| 2 |
| 6 |
| — |
| 20 |
Boeing 737-7/8/9 MAX |
| 2 |
| 28 |
| 24 |
| 42 |
| 30 |
| — |
| 126 |
Boeing 787-9/10 |
| 8 |
| 6 |
| 8 |
| 10 |
| 2 |
| — |
| 34 |
Total |
| 26 |
| 64 |
| 79 |
| 98 |
| 77 |
| 55 |
| 399 |
| (1) | In addition to the Company’s commitments, as of March 31, 2020, the Company had options to acquire up to 25 Airbus A220 aircraft. If exercised, deliveries of these aircraft are scheduled to commence in 2023 and continue through 2028. |
| (2) | Our Airbus A320/321neo aircraft orders include 47 long-range variants and 29 extra long-range variants. |
Aircraft Delivery Delays
Pursuant to our purchase agreements with Boeing and Airbus for new aircraft, we and each manufacturer agree to contractual delivery dates for each aircraft ordered. These dates can change for a variety of reasons, and in the last several years manufacturing delays have significantly impacted our actual delivery dates. For several years, we have experienced delivery delays for certain of our Airbus orderbook aircraft, primarily the A321neo aircraft and, to a lesser extent, A330neo aircraft. The worldwide grounding of the Boeing 737 MAX aircraft (“737 MAX”) began on March 10, 2019, and remains in effect. As a result, Boeing has temporarily halted production and delivery of all 737 MAX aircraft and our new 737 MAX aircraft have been significantly delayed. Lifting of the grounding is subject to the approval of global regulatory authorities and we are unable to speculate as to when this may occur. Even after the grounding is lifted, Boeing’s ability to deliver 737 MAX aircraft may be impacted as a result of the COVID-19 pandemic. We are currently in discussions with Boeing regarding the mitigation of possible damages resulting from the grounding of, and the delivery delays associated with the 737 MAX aircraft that we own or have on order, which could result in changes to the commitment table.
21
The ongoing COVID-19 pandemic has caused delivery delays of aircraft in our orderbook and is expected to continue to cause delays of aircraft. As discussed in further detail above in “COVID-19 Pandemic,” the pandemic has resulted in numerous travel restrictions and business shutdowns, including the temporary closure of final aircraft assembly facilities for each of Boeing and Airbus. Given the dynamic nature of the ongoing COVID-19 pandemic, we are in ongoing discussions with Boeing and Airbus to determine the impact and duration of delivery delays. However, we are not yet able to determine the impact of the delivery delays, and as such, the delivery dates listed above could materially change.
The aircraft purchase commitments discussed above also could be impacted by lease cancellation. Our leases typically provide that we and our airline customer each have a cancellation right related to certain aircraft delivery delays. Our purchase agreements with Boeing and Airbus also generally provide that the Company and the manufacturer each have cancellation rights that typically are parallel with our cancellation rights in our leases. Our leases and our purchase agreements with Boeing and Airbus generally provide for cancellation rights starting at one year after the original contractual delivery date, regardless of cause. Pursuant to such contractual provisions, we are in discussions with lessees who are considering cancelling a small number of 737 MAX leases with us.
The following table, which is subject to change based on Airbus and Boeing delivery delays, shows the number of new aircraft scheduled to be delivered as of March 31, 2020. As noted above, we expect delivery delays for all aircraft deliveries in our orderbook, including Boeing 737 MAX delivery delays after the grounding of such aircraft is lifted. We are currently in discussions with Boeing and Airbus to determine the extent and duration of delivery delays, but given the dynamic nature of the ongoing COVID-19 pandemic, we are not yet able to determine the full impact of the delivery delays.
| | | | | | | |
| | Number of |
| Number |
| |
|
Delivery Year |
| Aircraft |
| Leased |
| % Leased |
|
2020 |
| 26 |
| 26 |
| 100.0 | % |
2021 |
| 64 |
| 62 |
| 96.9 | % |
2022 |
| 79 |
| 54 |
| 68.4 | % |
2023 |
| 98 |
| 34 |
| 34.7 | % |
2024 |
| 77 |
| 10 |
| 13.0 | % |
Thereafter |
| 55 |
| — |
| — | % |
Total |
| 399 |
| 186 | | | |
Aircraft Industry and Sources of Revenues
Our revenues are principally derived from operating leases with scheduled and charter airlines throughout the world. As of March 31, 2020, we have a globally diversified customer base comprised of 108 airlines in 61 different countries, with over 95% of our business revenues from airlines domiciled outside of the U.S., and we anticipate that most of our revenues in the future will be generated from foreign customers.
Performance of the commercial airline industry is linked to global economic health and development, which may be negatively impacted by economic disruption, macroeconomic conditions and geopolitical and policy risks, among other factors. COVID-19 has caused significant disruption to the commercial airline industry resulting in a meaningful decline in air travel demand and subsequent flight cancellations, negatively impacting airlines, aircraft manufacturers, and other related businesses. The International Air Transport Association (“IATA”) reported that, primarily due to COVID-19, passenger traffic fell 22% year-over-year for the first three months of 2020 and 53% year-over-year for March 2020 and IATA expects airline passenger volumes to fall 48% in 2020 as compared to 2019.
We expect a significant increase in financial difficulties for our airline customers through 2020 and perhaps longer, including the need for lease deferrals or other lease concessions, requests to return aircraft early or defaults. We expect increased airline reorganizations, liquidations, or other forms of bankruptcies, which may include our aircraft customers and result in the early return of aircraft or changes in our lease terms. As of the date of this filing, we had six aircraft across three airlines which were subject to various forms of insolvency proceedings.
22
Approximately 75% of the net book value of our fleet are leased to flag carriers or airlines that have some form of governmental ownership; however, this does not guarantee our ability to collect contractual rent payments. We believe that having a large portion of the net book value of our fleet on lease with flag carriers or airlines with some form of governmental ownership, coupled with the overall quality of our aircraft and security deposits and maintenance reserves under our leases will help mitigate our customer risk.
We expect the aviation industry to recover over time from the impact of COVID-19, and in the long-term we remain optimistic. While we believe some aircraft lessors may consolidate or cease operations as a result of the pandemic, we believe the overall aircraft leasing industry has remained resilient over time across a variety of global economic conditions and remain optimistic about the long-term fundamentals of our business. As a result of the COVID-19 pandemic, some airlines have accelerated their plans to retire older, less fuel-efficient aircraft that have higher maintenance costs in the current environment, and we anticipate that airlines will continue to accelerate the retirement of this type of aircraft, ultimately increasing demand for newer aircraft over time. We also anticipate that when airlines need to add new aircraft to their fleet, they will increasingly elect to lease aircraft instead of purchasing aircraft to reduce capital requirements and manage other operating expenses, and that we will benefit from that trend.
We and airlines around the world have continued to experience delivery delays from Boeing and Airbus, from which we have 399 aircraft on order as of March 31, 2020, as discussed above in “Our Fleet.” The Airbus delays and the 737 MAX grounding have impacted the growth of our company as well as the growth of our airline customers, passenger growth and airline profitability and we expect this to continue. The impact of COVID-19 has also resulted in temporary closures and lower production rates and deliveries for both Boeing and Airbus, which is expected to cause further delivery delays.
The worldwide grounding of the 737 MAX began on March 10, 2019, and remains in effect. As a result, Boeing has temporarily halted production and delivery of all 737 MAX aircraft. Since March of 2019, airlines affected by this grounding have had to adjust flight schedules or cancel flights, back fill aircraft with other aircraft types or keep older aircraft in service longer. These operational changes and the uncertainty of when the 737 MAX aircraft will return to service and when Boeing will resume deliveries have impacted the profitability of certain airlines.
As of March 31, 2020, we owned and leased 15 737 MAX aircraft and we have 126 737 MAX aircraft on order. Lifting of the grounding is subject to global regulatory authorities and we are unable to speculate as to when this may occur. Because of this uncertainty, we have curtailed our leasing of MAX aircraft in our orderbook aircraft since the grounding. With respect to the 15 737 MAX aircraft we own and lease, our airline customers are obligated to continue to make payments under the lease, irrespective of any difficulties in which the lessees may encounter, including an aircraft fleet grounding. Some of our airline customers for these 15 737 MAX aircraft lease payments are in arrears.
We expect that if the grounding continues for an extended time, or if there are significant 737 MAX delivery delays even after the grounding is lifted as a result of the impact of the COVID-19 pandemic, some of our customers may seek to cancel their lease contracts with us. We are in discussions with lessees who are considering cancelling a small number of 737 MAX leases with us. It is unclear at this point if we will cancel some of our 737 MAX delivery positions with Boeing or attempt to find replacement lessees. We are currently in discussions with Boeing regarding the mitigation of possible damages resulting from the grounding of and the delivery delays associated with the 737 MAX aircraft that we own and have on order.
For several years, Airbus has also had delivery delays for certain of its aircraft, primarily the A321neo aircraft and, to a lesser extent, A330neo aircraft. Those delays are continuing and have worsened. Airbus has told us to continue to expect several months of delivery delays relating to such aircraft scheduled to deliver through 2022. These delays also have impacted airline operations and the profitably of certain airlines.
Further as it relates to Airbus aircraft, in October 2019, the Office of the U.S. Trade Representative announced a 10% tariff on new aircraft imported from Europe, including Airbus aircraft. The U.S. government has recently made statements and taken certain actions that have led to, and may lead to, further changes to U.S. and international trade policies, including recently imposed tariffs affecting certain products exported by a number of U.S. trading partners, such as Europe and China. In response, many U.S. trading partners, including Europe and China, have imposed or proposed new or higher tariffs on U.S. products. We are currently monitoring the impact of this announcement on our future Airbus deliveries to U.S. customers. We cannot predict what further actions may ultimately be taken with respect
23
to tariffs or trade relations between the U.S. and U.S. trading partners. Accordingly, it is difficult to predict exactly how, and to what extent, such actions may impact our business, or the business of our lessees or aircraft manufacturers. Any unfavorable government policies on international trade, such as capital controls or tariffs, may affect the demand for aircraft, increase the cost of aircraft components, further delay production, impact the competitive position of certain aircraft manufacturers or prevent aircraft manufacturers from being able to sell aircraft in certain countries. Our leases are primarily structured as triple net leases, whereby the lessee is responsible for all operating costs including taxes, insurance, and aircraft maintenance.
Given the impact of COVID-19 on our industry, it is unclear at this time how competition within the aircraft leasing industry will evolve or change in the coming months and what the corresponding impact on lease rates will be as a result of the change in the competitive landscape, COVID-19, trade matters, the aircraft delays from Airbus and Boeing or other items.
Liquidity and Capital Resources
Overview
We finance the purchase of aircraft and our business with available cash balances, internally generated funds, including through aircraft sales and trading activity, and debt financings. We have structured ourselves with the goal to maintain investment-grade credit metrics and our debt financing strategy has focused on funding our business on an unsecured basis. We currently have an undrawn balance of $5.6 billion under our revolving credit facility, which does not condition our ability to borrow on the lack of a material adverse effect to us or the general economy. Unsecured financing provides us with operational flexibility when selling or transitioning aircraft from one airline to another. We also have the ability to seek debt financing secured by our assets, as well as financings supported through the Export-Import Bank of the United States and other export credit agencies for future aircraft deliveries. Additionally, we only have approximately $319.4 million in debt maturities for the remainder of 2020, which serves to limit our near-term financing needs. Aircraft delivery delays as a product of the COVID-19 pandemic and the 737 MAX grounding are expected to further reduce our debt financing needs this year and potentially beyond. We continue to monitor COVID-19 and its impact on our overall liquidity position and outlook.
We ended the first quarter of 2020 with total debt outstanding, net of discounts and issuance costs, of $14.4 billion compared to $13.6 billion as of December 31, 2019. Our unsecured debt increased to $14.2 billion as of March 31, 2020 from $13.3 billion as of December 31, 2019. Our unsecured debt as a percentage of total debt increased to 97.6% as of March 31, 2020 from 96.6% as of December 31, 2019.
Our cash flows provided by operating activities decreased by 10.4% or $27.2 million, to $234.0 million for the three months ended March 31, 2020 as compared to $261.2 million for the three months ended March 31, 2019. The decrease in our cash flow provided by operating activities is due to an increase in deferred lease payments during the quarter as a result of the COVID-19 pandemic. Our cash flow used in investing activities was $672.3 million for the three months ended March 31, 2020, which resulted primarily from the purchase of aircraft, partially offset by proceeds from our sales and trading activity. Our cash flow provided by financing activities was $853.6 million for the three months ended March 31, 2020, which resulted primarily from the issuance of unsecured notes partially offset by the repayment of outstanding debt. We expect the impact of COVID-19, including as a result of rent deferrals and other lease concessions made or that we may make in the future to our customers, will continue to have negative impact on cash flow from operating activities.
We ended the first quarter of 2020 with available liquidity of $6.3 billion which is comprised of unrestricted cash of $732.7 million and an available borrowing capacity under our committed unsecured revolving credit facility of $5.6 billion. We believe that we have sufficient liquidity to satisfy the operating requirements of our business through the next 12 months. A key component of the ongoing liquidity available to us is our committed unsecured revolving credit facility, for which the substantial majority of the commitments mature in 2023. Our committed unsecured revolving credit facility is syndicated across 53 financial institutions from around various regions of the world, diversifying our reliance on any individual lending institution. We continue to utilize our committed unsecured revolving credit facility in the normal course of business.
The ultimate impact the COVID-19 pandemic may have on our business, results of operations and financial condition over the next 12 months is currently uncertain and will depend on certain developments, including, among
24
others, the impact of the COVID-19 pandemic on our airline customers and the magnitude and duration of the pandemic. We currently believe that our cash on hand, current debt arrangements and general ability to access the capital markets will be sufficient to finance our operations and fund our debt service requirements and capital expenditures, including aircraft acquisition over the next 12 months. We also have the ability to seek debt financing secured by our assets, as well as financings supported through the Export-Import Bank of the United States and other export credit agencies, or ECAs for future aircraft deliveries.
As of March 31, 2020, we were in compliance in all material respects with the covenants contained in our debt agreements. A ratings downgrade will not result in a default under any of our debt agreements, but it could adversely affect our ability to issue debt and obtain new financings, or renew existing financings, and it would increase the costs of certain financings. Our liquidity plans are subject to a number of risks and uncertainties, including those described in our Annual Report on Form 10-K for the year ended December 31, 2019, and in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
Debt
Our debt financing was comprised of the following at March 31, 2020 and December 31, 2019 (in thousands, except percentages):
| | | | | | | |
|
|
|
| ||||
Unsecured | | | | | | | |
Senior notes | | $ | 12,834,333 | | $ | 12,357,811 | |
Term financings | |
| 877,950 | |
| 883,050 | |
Revolving credit facility | | | 515,000 | | | 20,000 | |
Total unsecured debt financing | |
| 14,227,283 | |
| 13,260,861 | |
Secured | | | | | | | |
Term financings | |
| 322,320 | |
| 428,824 | |
Export credit financing | |
| 29,947 | |
| 31,610 | |
Total secured debt financing | |
| 352,267 | |
| 460,434 | |
| | | | | | | |
Total debt financing | |
| 14,579,550 | |
| 13,721,295 | |
Less: Debt discounts and issuance costs | |
| (164,929) | |
| (142,429) | |
Debt financing, net of discounts and issuance costs | | $ | 14,414,621 | | $ | 13,578,866 | |
Selected interest rates and ratios: | | | | | | | |
Composite interest rate(1) | |
| 3.16 | % | | 3.34 | % |
Composite interest rate on fixed-rate debt(1) | |
| 3.31 | % | | 3.39 | % |
Percentage of total debt at fixed-rate | |
| 86.41 | % | | 88.40 | % |
| (1) | This rate does not include the effect of upfront fees, facility fees, undrawn fees or amortization of debt discounts and issuance costs. |
Senior unsecured notes (including Medium-Term Note Program)
As of March 31, 2020, we had $12.8 billion in senior unsecured notes outstanding. As of December 31, 2019, we had $12.4 billion in senior unsecured notes outstanding.
During the three months ended March 31, 2020, we issued $1.40 billion in aggregate principal amount of Medium-Term Notes comprised of (i) $750.0 million due 2025 at a fixed rate of 2.30% and (ii) $650.0 million due 2030 at a fixed rate of 3.00%.
Unsecured revolving credit facility
We have an unsecured revolving credit facility with JPMorgan Chase Bank, N.A., as agent. During the quarter ended March 31,2020, we increased the aggregate capacity of our unsecured revolving credit facility by $250.0 million to $6.1 billion. As of March 31, 2020, the total outstanding balance on our unsecured revolving credit facility was approximately $515.0 million. The total outstanding balance under our unsecured revolving credit facility was approximately $20.0 million as of December 31, 2019.
25
On May 5, 2020, commitments totaling $92.7 million of our committed unsecured revolving credit facility matured. Lenders hold revolving commitments totaling approximately $5.5 billion that mature on May 5, 2023, commitments totaling $245.0 million that mature on May 5, 2022 and commitments totaling $5.0 million that mature on May 5, 2021. As of May 7, 2020, after giving effect to the commitments that matured on May 5, 2020, the aggregate capacity of our committed unsecured revolving credit facility was approximately $6.0 billion.
As of March 31, 2020, borrowings under our committed unsecured revolving credit facility will generally bear interest at either (a) LIBOR plus a margin of 1.05% per year or (b) an alternative base rate plus a margin of 0.05% per year, subject, in each case, to increases or decreases based on declines in the credit ratings for our debt. We are required to pay a facility fee of 0.20% per year (also subject to increases or decreases based on declines in the credit ratings for our debt) in respect of total commitments under our unsecured revolving credit facility. Borrowings under our committed unsecured revolving credit facility are used to finance our working capital needs in the ordinary course of business and for other general corporate purposes.
Preferred equity
On March 5, 2019, we issued 10,000,000 shares of 6.150% Fixed-to-Floating Non-Cumulative Perpetual Preferred Stock, Series A (the “Series A Preferred Stock”), $0.01 par value, with a liquidation preference of $25.00 per share. We will pay dividends on the Series A Preferred Stock only when, as and if declared by the board of directors. Dividends will accrue, on a non-cumulative basis, on the stated amount of $25.00 per share at a rate per annum equal to: (i) 6.150% during the first five years and payable quarterly in arrears beginning on June 15, 2019, and (ii) three-month LIBOR plus a spread of 3.650% per annum from March 15, 2024, reset quarterly and payable quarterly in arrears beginning on June 15, 2024.
We may redeem shares of the Series A Preferred Stock at our option, in whole or in part, from time to time, on or after March 15, 2024, for cash at a redemption price equal to $25.00 per share, plus any declared and unpaid dividends to, but excluding, the redemption date, without accumulation of any undeclared dividends. We may also redeem shares of the Series A Preferred Stock at our option under certain other limited conditions.
On February 14, 2020, our board of directors also approved a cash dividend of $0.384375 per share on our outstanding Series A Preferred Stock, which was paid on March 15, 2020 to holders of record of our Series A Preferred Stock as of February 29, 2020.
Potential Impact of LIBOR Transition
As of March 31, 2020, we had approximately $2.0 billion of floating rate debt outstanding that used LIBOR as the applicable reference rate to calculate the interest on such debt. Additionally, our Series A Preferred Stock will in the future accrue dividends at a floating rate determined by reference to LIBOR, if available. The Chief Executive of the U.K. Financial Conduct Authority (the “FCA”), which regulates LIBOR, has announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021. That announcement indicates that the continuation of LIBOR on the current basis cannot and will not be guaranteed after 2021. Moreover, it is possible that LIBOR will be discontinued or modified prior to 2021. The U.S. Federal Reserve and the Bank of England have begun publishing a Secured Overnight Funding Rate and a reformed Sterling Overnight Index Average, respectively, which are currently intended to serve as alternative reference rates to LIBOR. At this time, however, it is not possible to predict the establishment of any market-accepted alternative reference rates or any other reforms to LIBOR and the effect of any such changes.
Furthermore, due to the uncertainty surrounding the discontinuation of LIBOR and the effects resulting therefrom, financial market participants have yet to establish standard fallback provisions governing the calculation of floating rate interest and dividends in the event LIBOR is unavailable. The lack of a market practice and inconsistency in fallback provisions is reflected across our floating rate debt and Series A Preferred Stock and the discontinuation of LIBOR could lead to unexpected outcomes that may vary between our various debt and equity securities that reference LIBOR to determine the rate in which interest or dividends, as applicable, accrue. For example, if LIBOR is discontinued, the various fallback provisions contained in our floating rate debt agreements could lead to such debt bearing interest at, among other things, a rate of interest equal to the interest rate last in effect for which LIBOR was determinable, a floating rate determined in reference to a predetermined fallback reference rate or an alternative reference rate to be
26
agreed upon by the parties to such agreement, and a rate of interest representative of the cost to applicable lenders of funding their participation in the debt.
If the rate used to calculate interest on our outstanding floating rate debt that currently uses LIBOR and our Series A Preferred Stock were to increase by 1.0% either as a result of an increase in LIBOR or the result of the use of an alternative reference rate determined under the fallback provisions in the applicable debt if LIBOR is discontinued, we would expect to incur additional interest expense on such indebtedness as of March 31, 2020 of approximately $19.8 million on an annualized basis. Further, if LIBOR is discontinued and there is no acceptable alternative reference rate, some of our floating rate debt, including certain senior unsecured notes issued under our Medium-Term Note Program, may effectively become fixed rate debt. As a result, the cost of this debt would increase to us if and as interest rates decreased.
While we do not expect the potential impact of any LIBOR transition to have a material effect on our financial results based on our currently outstanding debt, uncertainty as to the nature of potential changes to LIBOR, fallback provisions, alternative reference rates or other reforms could adversely impact our interest expense on our floating rate debt that currently uses LIBOR as the applicable reference rate and our Series A Preferred Stock. In addition, any alternative reference rates to LIBOR may result in interest or dividend payments that do not correlate over time with the payments that would have been made on our indebtedness or Series A Preferred Stock, respectively, if LIBOR was available in its current form. Further, the discontinuance or modification of LIBOR and uncertainty of an alternative reference rate may result in the increase in the cost of future indebtedness, which could have a material adverse effect on our financial condition, cash flow and results of operations. We intend to closely monitor the financial markets and the use of fallback provisions and alternative reference rates in 2020 in anticipation of the discontinuance or modification of LIBOR by the end of 2021.
Credit ratings
The following table summarizes our current credit ratings:
| | | | | | | | |
Rating Agency |
| Long-term Debt |
| Corporate Rating |
| Outlook |
| Date of Last Ratings Action |
Kroll Bond Ratings |
| A- |
| A- |
| Negative |
| |
Standard and Poor's |
| BBB |
| BBB |
| Negative |
| |
Fitch Ratings | | BBB | | BBB | | Negative | |
While a ratings downgrade would not result in a default under any of our debt agreements, it could adversely affect our ability to issue debt and obtain new financings, or renew existing financings, and it would increase the cost of our financings.
27
Results of Operations
The following table presents our historical operating results for the three month periods ended March 31, 2020 and 2019 (in thousands, except per share amounts and percentages):
| | | | | | | |
|
| Three Months Ended March 31, |
| ||||
| | 2020 |
| 2019 |
| ||
| | (unaudited) | | ||||
Revenues | | | | | | | |
Rental of flight equipment | | $ | 496,687 | | $ | 455,739 | |
Aircraft sales, trading and other | |
| 14,700 | |
| 10,312 | |
Total revenues | |
| 511,387 | |
| 466,051 | |
Expenses | | | | | | | |
Interest | |
| 107,541 | |
| 89,220 | |
Amortization of debt discounts and issuance costs | |
| 10,528 | |
| 8,540 | |
Interest expense | |
| 118,069 | |
| 97,760 | |
Depreciation of flight equipment | |
| 188,895 | |
| 159,471 | |
Selling, general and administrative | |
| 28,322 | |
| 29,702 | |
Stock-based compensation | |
| 4,429 | |
| 4,174 | |
Total expenses | |
| 339,715 | |
| 291,107 | |
Income before taxes | |
| 171,672 | |
| 174,944 | |
Income tax expense | |
| (34,521) | |
| (36,850) | |
Net income | | $ | 137,151 | | $ | 138,094 | |
Preferred stock dividends | | | (3,844) | | | — | |
Net income available to common stockholders | | $ | 133,307 | | $ | 138,094 | |
| | | | | | | |
Earnings per share of Class A and B common stock | | | | | | | |
Basic | | $ | 1.17 | | $ | 1.24 | |
Diluted | | $ | 1.17 | | $ | 1.23 | |
| | | | | | | |
Other financial data | | | | | | | |
Pre-tax profit margin | | | 33.6 | % | | 37.5 | % |
Adjusted net income before income taxes(1) | | $ | 182,785 | | $ | 187,658 | |
Adjusted pre-tax profit margin(1) | | | 35.7 | % | | 40.3 | % |
Adjusted diluted earnings per share before income taxes(1) | | $ | 1.61 | | $ | 1.67 | |
Pre-tax return on common equity (trailing twelve months) | | | 13.8 | % | | 14.7 | % |
Adjusted pre-tax return on common equity (trailing twelve months)(1) | | | 14.9 | % | | 15.9 | % |
| (1) | Adjusted net income before income taxes (defined as net income available to common stockholders excluding the effects of certain non-cash items, one-time or non-recurring items, that are not expected to continue in the future and certain other items), adjusted pre-tax profit margin (defined as adjusted net income before income taxes divided by total revenues), adjusted diluted earnings per share before income taxes (defined as adjusted net income before income taxes divided by the weighted average diluted common shares outstanding) and adjusted pre-tax return on common equity (defined as adjusted net income before income taxes divided by average common shareholders’ equity) are measures of operating performance that are not defined by GAAP and should not be considered as an alternative to net income available to common stockholders, pre-tax profit margin, earnings per share, diluted earnings per share and pre-tax return on common equity, or any other performance measures derived in accordance with GAAP. Adjusted net income before income taxes, adjusted pre-tax profit margin, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity are presented as supplemental disclosure because management believes they provide useful information on our earnings from ongoing operations. |
Management and our board of directors use adjusted net income before income taxes, adjusted pre-tax profit margin, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity to assess our consolidated financial and operating performance. Management believes these measures are helpful in evaluating the operating performance of our ongoing operations and identifying trends in our performance, because they remove the effects of certain non-cash items, one-time or non-recurring items that are not expected to continue in the future and certain other items from our operating results. Adjusted net income before income taxes, adjusted
28
pre-tax profit margin, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity, however, should not be considered in isolation or as a substitute for analysis of our operating results or cash flows as reported under GAAP. Adjusted net income before income taxes, adjusted pre-tax profit margin, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity do not reflect our cash expenditures or changes in our cash requirements for our working capital needs. In addition, our calculation of adjusted net income before income taxes, adjusted pre-tax profit margin, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity may differ from the adjusted net income before income taxes, adjusted pre-tax profit margin, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity, or analogous calculations of other companies in our industry, limiting their usefulness as a comparative measure.
The following tables show the reconciliation of net income available to common stockholders to adjusted net income before income taxes and adjusted pre-tax profit margin (in thousands, except percentages):
| | | | | | | |
| | Three Months Ended |
| ||||
| |
| |||||
|
| 2020 |
| 2019 |
| ||
|
| (unaudited) | | ||||
Reconciliation of net income available to common stockholders to adjusted net income before income taxes and adjusted pre-tax profit margin: | | | | | | | |
Net income available to common stockholders | | $ | 133,307 | | $ | 138,094 | |
Amortization of debt discounts and issuance costs | | | 10,528 | | | 8,540 | |
Stock-based compensation | | | 4,429 | | | 4,174 | |
Provision for income taxes | | | 34,521 | | | 36,850 | |
Adjusted net income before income taxes | | $ | 182,785 | | $ | 187,658 | |
| | | | | | | |
Total revenues | | $ | 511,387 | | $ | 466,051 | |
Adjusted pre-tax profit margin(1) | | | 35.7 | % | | 40.3 | % |
| (1) | Adjusted pre-tax profit margin is adjusted net income before income taxes divided by total revenues |
The following table shows the reconciliation of net income available to common stockholders to adjusted diluted earnings per share before income taxes (in thousands, except share and per share amounts):
| | | | | | |
| | Three Months Ended | ||||
|
| |||||
|
| 2020 |
| 2019 | ||
| | (unaudited) | ||||
Reconciliation of net income available to common stockholders to adjusted diluted earnings per share before income taxes: | | | | | | |
Net income available to common stockholders | | $ | 133,307 | | $ | 138,094 |
Amortization of debt discounts and issuance costs | |
| 10,528 | |
| 8,540 |
Stock-based compensation | |
| 4,429 | |
| 4,174 |
Provision for income taxes | |
| 34,521 | |
| 36,850 |
Adjusted net income before income taxes | | $ | 182,785 | | $ | 187,658 |
Weighted-average diluted common shares outstanding | |
| 113,785,028 | |
| 112,380,856 |
Adjusted diluted earnings per share before income taxes | | $ | 1.61 | | $ | 1.67 |
29
The following table shows the reconciliation of net income available to common stockholders to adjusted pre-tax return on common equity (in thousands, except percentages):
| | | | | | | |
| | Trailing Twelve Months | | ||||
|
| 2020 |
| 2019 |
| ||
| | (unaudited) | | ||||
Reconciliation of net income available to common stockholders to adjusted pre-tax return on common equity: |
| |
|
| |
|
|
Net income available to common stockholders | | $ | 570,376 | | $ | 538,278 | |
Amortization of debt discounts and issuance costs | |
| 38,679 | |
| 33,224 | |
Stock-based compensation | |
| 21,000 | |
| 18,220 | |
Provision for income taxes | |
| 146,235 | |
| 135,485 | |
Adjusted net income before income taxes | | $ | 776,290 | | $ | 725,207 | |
| | | | | | | |
Common shareholders’ equity as of beginning of the period | | $ | 4,923,817 | | $ | 4,226,623 | |
Common shareholders’ equity as of end of the period | | | 5,486,369 | | | 4,923,817 | |
Average common shareholders' equity | | $ | 5,205,093 | | $ | 4,575,220 | |
| | | | | | | |
Adjusted pre-tax return on common equity | |
| 14.9 | % |
| 15.9 | % |
Three months ended March 31, 2020, compared to the three months ended March 31, 2019
Rental revenue
As of March 31, 2020, we owned 300 aircraft with a net book value of $19.2 billion and recorded $496.7 million in rental revenue for the quarter then ended, which included $5.5 million in amortization expense related to initial direct costs, which is net of overhaul revenue. In the prior year, as of March 31, 2019, we owned 280 aircraft with a net book value of $16.3 billion and recorded $455.7 million in rental revenue for the quarter ended March 31, 2019, which included overhaul revenue, net of amortization expense related to initial direct costs, of $18.0 million. This increase was principally driven by the continued growth of our fleet, partially offset by a reduction in end of lease revenue recognized in the period as compared to prior year. In the prior period, we recognized $20.2 million of end of lease revenue in connection with an airline bankruptcy whereas we did not recognize end of lease revenue in the current period.
Aircraft sales, trading and other revenue
Aircraft sales, trading and other revenue totaled $14.7 million for the three months ended March 31, 2020 compared to $10.3 million for the three months ended March 31, 2019. During the quarter ended March 31, 2020, we recorded $1.6 million in gains from the sale of three aircraft from our held for sale portfolio and $5.9 million in other revenue from the forfeiture of security deposits. During the quarter ended March 31, 2019, we recorded $3.6 million in gains from the sale of six aircraft from our operating lease portfolio. As noted above, we expect the COVID-19 pandemic to have an adverse impact on demand for used aircraft and that we will sell fewer used aircraft in 2020 and potentially 2021 than we initially planned to sell.
Interest expense
Interest expense totaled $118.1 million for the three months ended March 31, 2020 compared to $97.8 million for the three months ended March 31, 2019. The increase was primarily due to an increase in our aggregate debt balance partially offset by a decrease in our composite interest rate. We expect that our interest expense will increase as our average debt balance outstanding continues to increase. Interest expense will also be impacted by changes in our composite cost of funds.
Depreciation expense
We recorded $188.9 million in depreciation expense of flight equipment for the three months ended March 31, 2020 compared to $159.5 million for the three months ended March 31, 2019. The increase in depreciation expense for the
30
three months ended March 31, 2020, compared to the three months ended March 31, 2019, is primarily attributable to the acquisition of additional aircraft in our operating fleet during the last twelve months.
Selling, general and administrative expenses
We recorded selling, general and administrative expenses of $28.3 million for the three months ended March 31, 2020 compared to $29.7 million for the three months ended March 31, 2019. Selling, general and administrative expense as a percentage of total revenue decreased to 5.5% for the three months ended March 31, 2020 compared to 6.4% for the three months ended March 31, 2019. As we continue to add new aircraft to our portfolio, we expect over the long-term, selling, general and administrative expense to decrease as a percentage of our revenue.
Taxes
The effective tax rate was 20.1% and 21.1% for the three months ended March 31, 2020 and 2019, respectively. Changes in the tax rate were primarily driven by variances in permanent items.
Net income available to common stockholders
For the three months ended March 31, 2020, we reported consolidated net income available to common stockholders of $133.3 million, or $1.17 per diluted share, compared to a consolidated net income available to common stockholders of $138.1 million, or $1.23 per diluted share, for the three months ended March 31, 2019. Net income available to common stockholders decreased in the first quarter of 2020 as compared to 2019, principally driven by a reduction in end of lease revenue, partially offset by the continued growth of our fleet.
Adjusted net income before income taxes
For the three months ended March 31, 2020, we recorded adjusted net income before income taxes of $182.8 million, or $1.61 per diluted share, compared to an adjusted net income before income taxes of $187.7 million, or $1.67 per diluted share, for the three months ended March 31, 2019. Our adjusted net income before income taxes decreased principally driven by a reduction in end of lease revenue, partially offset by the continued growth of our fleet.
Adjusted net income before income taxes and adjusted diluted earnings per share before income taxes are measures of financial and operational performance that are not defined by GAAP. See Note 1 under the “Results of Operations” table above for a discussion of adjusted net income before income taxes and adjusted diluted earnings per share before income taxes as non-GAAP measures and reconciliation of these measures to net income available to common stockholders.
31
Contractual Obligations
Our contractual obligations as of March 31, 2020, are as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | |
|
| 2020 |
| 2021 |
| 2022 |
| 2023 |
| 2024 |
| Thereafter |
| Total | |||||||
Long-term debt obligations | | $ | 319,372 | | $ | 2,049,294 | | $ | 2,751,269 | | $ | 2,988,154 | | $ | 1,534,552 | | $ | 4,936,909 | | $ | 14,579,550 |
Interest payments on debt outstanding(1) | |
| 327,433 | | | 433,416 | | | 373,547 | | | 290,823 | | | 210,269 | | | 446,761 | |
| 2,082,249 |
Purchase commitments(2) | |
| 2,206,538 | | | 4,900,832 | | | 6,519,111 | | | 6,171,228 | | | 4,456,237 | | | 2,542,133 | |
| 26,796,079 |
Operating leases | |
| 5,188 | | | 7,059 | | | 6,506 | | | 6,387 | | | 4,545 | | | 33,045 | |
| 62,730 |
Total | | $ | 2,858,531 | | $ | 7,390,601 | | $ | 9,650,433 | | $ | 9,456,592 | | $ | 6,205,603 | | $ | 7,958,848 | | $ | 43,520,608 |
The above table does not include any dividends we may pay on our Series A Preferred Stock or common stock.
Off-Balance Sheet Arrangements
We have not established any unconsolidated entities for the purpose of facilitating off-balance sheet arrangements or for other contractually narrow or limited purposes. We have, however, from time to time established subsidiaries and created partnership arrangements or trusts for the purpose of leasing aircraft or facilitating borrowing arrangements, all of which are consolidated.
We have non-controlling interests in two investment funds in which we own 9.5% of the equity of each fund. We account for our interest in these funds under the equity method of accounting due to our level of influence and involvement in the funds. Also, we manage aircraft that we have sold through our Thunderbolt platform. In connection with the sale of these aircraft portfolios through our Thunderbolt platform, we hold non-controlling interests of approximately 5.0% in two entities. These investments are accounted for under the cost method of accounting.
Critical Accounting Policies
Our critical accounting policies reflecting management’s estimates and judgments are described in our Annual Report on Form 10-K for the year ended December 31, 2019. We have reviewed recently adopted accounting pronouncements and determined that the adoption of such pronouncements is not expected to have a material impact, if any, on our Consolidated Financial Statements. Accordingly, there have been no material changes to critical accounting policies in the three months ended March 31, 2020.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of changes in value of a financial instrument, caused by fluctuations in interest rates and foreign exchange rates. Changes in these factors could cause fluctuations in our results of operations and cash flows. We are exposed to the market risks described below.
Interest Rate Risk
The nature of our business exposes us to market risk arising from changes in interest rates. Changes, both increases and decreases, in our cost of borrowing, as reflected in our composite interest rate, directly impact our net income. Our lease rental stream is generally fixed over the life of our leases, whereas we have used floating-rate debt to finance a
32
significant portion of our aircraft acquisitions. As of March 31, 2020 and December 31, 2019, we had $2.0 billion and $1.6 billion in floating-rate debt outstanding, respectively. If interest rates increase, we would be obligated to make higher interest payments to our lenders. If we incur significant fixed-rate debt in the future, increased interest rates prevailing in the market at the time of the incurrence of such debt would also increase our interest expense. If our composite interest rate were to increase by 1.0%, we would expect to incur additional interest expense on our existing indebtedness of approximately $19.8 million and $15.9 million as of March 31, 2020 and December 31, 2019, respectively, each on an annualized basis, which would put downward pressure on our operating margins. Further, as of March 31, 2020, 86.4% of our total debt incurred interest at a fixed rate.
We also have interest rate risk on our forward lease placements. This is caused by us setting a fixed lease rate in advance of the delivery date of an aircraft. The delivery date is when a majority of the financing for an aircraft is arranged. We partially mitigate the risk of an increasing interest rate environment between the lease signing date and the delivery date of the aircraft by having interest rate adjusters in a majority of our forward lease contracts which would adjust the final lease rate upward if certain benchmark interest rates are higher at the time of delivery of the aircraft than at the lease signing date.
Foreign Exchange Rate Risk
We attempt to minimize currency and exchange risks by entering into aircraft purchase agreements and a majority of lease agreements and debt agreements with U.S. dollars as the designated payment currency. Thus, most of our revenue and expenses are denominated in U.S. dollars. Approximately 1.0% and 0.7% of our lease revenues were denominated in foreign currency as of March 31, 2020 and December 31, 2019, respectively. As our principal currency is the U.S. dollar, fluctuations in the U.S. dollar as compared to other major currencies should not have a significant impact on our future operating results.
In December 2019, we issued C$400.0 million in aggregate principal amount of 2.625% notes due 2024. We effectively hedged our foreign currency exposure on this transaction through a cross-currency swap that converts the borrowing rate to a fixed 2.535% U.S. dollar denominated rate. See Note 8 of Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details on the fair value of the swap.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our filings under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”), and such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer (collectively, the “Certifying Officers”), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives as the Company’s controls are designed to do, and management necessarily was required to apply its judgment in evaluating the risk related to controls and procedures.
We have evaluated, under the supervision and with the participation of management, including the Certifying Officers, the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, as of March 31, 2020. Based on that evaluation, our Certifying Officers have concluded that our disclosure controls and procedures were effective at March 31, 2020.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended March 31, 2020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
33
PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may be involved in litigation and claims incidental to the conduct of our business in the ordinary course. Our industry is also subject to scrutiny by government regulators, which could result in enforcement proceedings or litigation related to regulatory compliance matters. We are not presently a party to any enforcement proceedings or litigation related to regulatory compliance matters or material legal proceedings. We maintain insurance policies in amounts and with the coverage and deductibles we believe are adequate, based on the nature and risks of our business, historical experience and industry standards.
ITEM 1A. RISK FACTORS
Other than stated below, there have been no material changes in our risk factors from those discussed under “Part I—Item 1A. Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2019.
The coronavirus (COVID-19) pandemic and related efforts to mitigate the pandemic have impacted our business, and the extent to which the COVID-19 pandemic and measures taken to contain its spread ultimately impact our business will depend on future developments, which are highly uncertain and are difficult to predict.
The global pandemic resulting from the coronavirus (“COVID-19”) pandemic has disrupted some of our operations and the operations of our lessees beginning in the first quarter of 2020. The COVID-19 pandemic has resulted in governmental authorities around the world implementing numerous measures to try to contain the virus, such as travel bans and restrictions, border closures, quarantines, shelter in place or total lock-down orders and business limitations and shutdowns (subject to exceptions for certain essential operations and businesses). These measures may remain in place for a significant amount of time. These measures, coupled with a decrease in consumer spending on travel as a result of the COVID-19 pandemic, have materially impacted airline traffic and operations throughout the world as well as our operations and the operations of our lessees and aircraft manufacturers and suppliers, including causing the temporary closure of Boeing and Airbus’ final assembly facilities. As the virus has spread in the last few months, the relatively limited impacts we saw in Asia in the early part of the year have accelerated and are now occurring throughout the rest of the world, with a rapid deterioration of global air travel. As a result of the spread of the COVID-19 pandemic, we may experience financial losses due to a number of operational factors, including but not limited to:
| ● | lease deferments, lease abatements and aircraft return requests from our lessees; |
| ● | impairment or delay in our ability to remarket aircraft or otherwise re-lease aircraft on a timely basis at favorable rates; |
| ● | default, bankruptcy or reorganization of our lessees; |
| ● | default, bankruptcy or reorganization of airlines generally, which would place pressure on aircraft values and lease rates generally; |
| ● | further delays in delivery of aircraft in our orderbook from Boeing and Airbus, including due to delays or bankruptcies of Boeing and Airbus suppliers; |
| ● | cancellations of, or a decline in, placements of aircraft in our orderbook for long-term leases; |
| ● | increased costs of borrowing, including if our credit ratings are ultimately downgraded; |
| ● | delays and other adverse impacts on our plans to grow the size of our operating fleet; |
| ● | reduced sale proceeds received in aircraft sales due to weaker market demand; and |
| ● | charges recognized by us or some of our lessees as a result of the measures implemented to contain the spread of COVID-19, including impairment of aircraft and engines and other long-lived assets. |
These factors may remain prevalent for a significant period of time and may continue to adversely affect our business, results of operations and financial condition even after the COVID-19 pandemic has subsided. In addition, if a resurgence of the COVID-19 virus occurs after the initial outbreak subsides, these factors will be exacerbated.
As of May 7, 2020, most of our lessees have requested some form of rental relief. We evaluate such requests on a case-by-case basis and have worked out accommodation arrangements with approximately 46% of our lessees. We remain in active discussions with a number of our airline customers for accommodation arrangements, such as lease payment deferrals and other lease concessions. As of May 7, 2020, the Company has agreed to defer approximately $124.6 million in lease payments, which represents approximately 6% of our total revenue for fiscal year 2019. So far,
34
such solutions have generally been in the form of partial lease deferrals for payments due in the first and second quarter of 2020, typically with a short-term repayment period, with the majority of the deferrals granted so far repaid by the end of this year. In many cases, lease extensions were also negotiated as part of the deferral accommodations. We remain in active discussions with our other airline customers and may continue to provide accommodation arrangements on a case-by-case basis. While a majority of our customers are flag carriers or have some form of governmental ownership, depending on the severity and longevity of the COVID-19 pandemic, the efforts taken to reduce its spread and the possibility of a resurgence of the COVID-19 pandemic, some of our lessees may still experience insolvency or initiate bankruptcy or similar proceedings. If this occurs, we may not be able to reposition the aircraft with other lessors and it could result in a significant decrease in our revenue and cash position. In addition, as of March 31, 2020, we had commitments to purchase 399 aircraft from Airbus and Boeing for delivery through 2026, and we had placed approximately 84% of our committed order book on long-term leases for aircraft delivering through 2022. The impact of the COVID-19 pandemic on airlines could result in the cancellation of leases that we have in place for our committed orderbook or a decline in the number of aircraft in our order book that we can place into leases prior to their delivery. If we are not able to place aircraft from our orderbook into leases prior to delivery, it may cause a downward pressure on our lease rates or require us to sell aircraft in our fleet sooner than anticipated.
We also expect delivery delays for all aircraft deliveries in our orderbook, including 737 MAX delivery delays after the grounding of such aircraft is lifted. We are currently in discussions with Boeing and Airbus to determine the extent and duration of delivery delays. The delays could result in cancellation of leases for those aircraft. We are in discussions with lessees who are considering cancelling a small number of our 737 MAX leases with us. If our customers cancel leases for aircraft that have been delayed, we typically have a cancellation right with the aircraft manufacturer that parallels our lessee’s cancellation rights. Given the dynamic nature of the ongoing COVID-19 pandemic, we are not yet able to determine the full impact of the delivery days.
While we currently expect delays in delivery of new aircraft from our orderbook, we will be required to raise additional capital to finance these deliveries and our access to and cost of financing depends on, among other things, global economic conditions, conditions in the global financing markets, the availability of sufficient amounts of financing, our prospects and our credit ratings. As a result of COVID-19, in March and April of 2020, S&P, Fitch and Kroll each changed their outlook on our long-term issuer and senior unsecured debt ratings from “stable” to “negative.” Such change in outlook may ultimately lead to a downgrade in our credit rating. If our credit ratings are downgraded, or general market conditions were to ascribe higher risk to our rating levels, our industry, or us, our access to capital and the cost of any debt financing will be further negatively impacted. In addition, the terms of future debt agreements could include more restrictive covenants, or require incremental collateral, which may further restrict our business operations or be unavailable due to our covenant restrictions then in effect. There is no guarantee that debt financings will be available in the future to fund our orderbook deliveries, or that such financing will be available on terms consistent with our historical agreements or expectations. Although we have sufficient liquidity to satisfy the operating requirements of our business through the next 12 months, the availability of certain sources is contingent upon our ability to continue to satisfy covenants contained in our debt agreements.
We have also experienced delays and terminations of some planned aircraft sales as a result of business limitations and shutdowns resulting from the pandemic. We also expect that demand for used aircraft will decline in the near-term and that we will sell fewer used aircraft in 2020 and perhaps 2021 than we initially planned to sell. This decline in demand for used aircraft may also result in impairment charges to the aircraft in our fleet.
As this situation is ongoing and the duration and severity of the COVID-19 pandemic is uncertain at this time, it is difficult to forecast the eventual long-term impacts on our future operating results or financial condition. We expect the COVID-19 pandemic will negatively impact our financial results, including having a larger impact on our results of operations for the second quarter and remainder of this year than has been reflected in our first quarter results for 2020. Depending on the severity and longevity of the COVID-19 pandemic, the related efforts taken to reduce its spread, and the possibility of a resurgence of the COVID-19 pandemic, we could recognize a significant adverse impact to our liquidity position due to lease deferrals and other lease concessions and a significant reduction in aircraft sales. Our earnings could also be adversely impacted by decreased revenue from airlines if airlines are forced to cease operations, decreased market prices for aircraft sales and lower volumes of aircraft sales. The extent to which the coronavirus pandemic and measures taken to contain its spread ultimately impact our business will depend on future developments, which are highly uncertain and are difficult to predict.
The spread of COVID-19 has also caused us to modify our business practices, including transitioning all of our employees to work remotely, restricting employee travel, and cancelling physical participation events and conferences.
35
We may take further actions as may be required by government authorities or as we determine are in the best interests of our employees.
The COVID-19 pandemic is emerging as one of the largest disruptions to the airline industry in decades. There are no comparable recent events that provide guidance as to the long-term effect the COVID-19 pandemic may have, and, as a result, the ultimate impact of the pandemic is highly uncertain and subject to change. We do not yet know the full extent of the impacts on our business, our operations or the global economy as a whole. Even after the COVID-19 pandemic has subsided, we may continue to experience negative impacts to our financial results due to COVID-19’s global economic impact, including the availability of credit generally and our ability to obtain capital on favorable terms, adverse impacts on our liquidity, increases in our borrowing costs, decreases in consumer discretionary spending and any recession that has occurred or may occur in the future. Risks related to our ability to obtain capital on favorable terms and increased costs of borrowing are more fully described in our risk factors titled, “Our success depends in large part on our ability to obtain capital on favorable terms to finance our growth through the purchase of aircraft and to repay or refinance our outstanding debt obligations as they mature. If we are not able to obtain capital on terms acceptable to us, or at all, it would significantly impact our ability to compete effectively in the commercial aircraft leasing market and would negatively affect our financial condition, cash flow and results of operations ” and “An increase in our borrowing costs would negatively affect our financial condition, cash flow and results of operations” under “Risk Factors - Risks Relating to our Business” in our Annual Report on Form 10-K for the year ended December 31, 2019.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
36
ITEM 6. EXHIBITS
| | | | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
Exhibit |
| Exhibit Description |
| Form |
| File No. |
| Exhibit |
| Filing Date |
| | | | | | | | | | |
3.1 | | Restated Certificate of Incorporation of Air Lease Corporation | | S-1 | | | 3.1 | | ||
| | | | | | | | | | |
3.2 | | Fourth Amended and Restated Bylaws of Air Lease Corporation. | | 8-K | | | 3.1 | | ||
| | | | | | | | | | |
3.3 | | | 8-A | | | 3.2 | | |||
| | | | | | | | | | |
4.1 | | | 10-K | | | 4.1 | | |||
| | | | | | | | | | |
10.1 | | | | | | |||||
| | | | | | | | | | |
10.2† | | | | | | |||||
| | | | | | | | | | |
10.3† | | | | | | | | | ||
| | | | | | | | | | |
10.4† | | | | | | | | | ||
| | | | | | | | | | |
10.5 | | | | | | | | | ||
| | | | | | | | | | |
31.1 | | | | | | | | | ||
| | | | | | | | | | |
31.2 | | | | | | | | | ||
| | | | | | | | | | |
32.1 | | | | | | | | | Furnished herewith | |
| | | | | | | | | | |
37
| | | | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
Exhibit |
| Exhibit Description |
| Form |
| File No. |
| Exhibit |
| Filing Date |
| | | | | | | | | | |
32.2 | | | | | | | | | Furnished herewith | |
| | | | | | | | | | |
101.INS | | XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | | | | | | | | |
| | | | | | | | | | |
101.SCH | | XBRL Taxonomy Extension Schema | | | | | | | | |
| | | | | | | | | | |
101.CAL | | XBRL Taxonomy Extension Calculation Linkbase | | | | | | | | |
| | | | | | | | | | |
101.DEF | | XBRL Taxonomy Extension Definition Linkbase | | | | | | | | |
| | | | | | | | | | |
101.LAB | | XBRL Taxonomy Extension Label Linkbase | | | | | | | | |
| | | | | | | | | | |
101.PRE | | XBRL Taxonomy Extension Presentation Linkbase | | | | | | | | |
| | | | | | | | | | |
104 | | The cover page from Air Lease Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in Inline XBRL | | | | | | | | |
†Portions of the referenced exhibit have been omitted pursuant to Item 601(b) of Regulation S-K because it (i) is not material and (ii) would be competitively harmful if publicly disclosed.
§ | Management contract or compensatory plan or arrangement. |
38
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AIR LEASE CORPORATION |
| |
/s/ John L. Plueger | |
| |
| Chief Executive Officer and President |
| (Principal Executive Officer) |
| |
| |
| Executive Vice President and Chief Financial Officer |
| (Principal Financial Officer and Principal Accounting Officer) |
39
| This ‘10-Q’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 6/15/24 | ||||
| 3/15/24 | ||||
| 5/5/23 | ||||
| 5/5/22 | ||||
| 5/5/21 | ||||
| 12/31/20 | ||||
| 7/9/20 | ||||
| 6/15/20 | ||||
| 6/5/20 | 4 | |||
| 5/31/20 | ||||
| Filed on: | 5/7/20 | 8-K | ||
| 5/6/20 | 4, 8-K, DEF 14A | |||
| 5/5/20 | ||||
| 4/10/20 | ||||
| For Period end: | 3/31/20 | |||
| 3/26/20 | ||||
| 3/23/20 | ||||
| 3/15/20 | ||||
| 3/11/20 | ||||
| 2/29/20 | ||||
| 2/14/20 | 10-K, 4, 5/A, 8-K, SC 13G | |||
| 1/30/20 | ||||
| 12/31/19 | 10-K, 5, 5/A | |||
| 6/15/19 | ||||
| 3/31/19 | 10-Q | |||
| 3/10/19 | ||||
| 3/5/19 | 8-K | |||
| 3/4/19 | 8-A12B, CERT | |||
| 12/31/18 | 10-K, 4 | |||
| 3/27/18 | 4, 8-K, CT ORDER | |||
| 5/7/14 | 3, 4, 8-K, DEF 14A, S-8 | |||
| 6/30/13 | 10-Q, 4 | |||
| 1/14/11 | S-1 | |||
| List all Filings | ||||
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 2/15/24 Air Lease Corp. 10-K 12/31/23 98:10M Workiva Inc Wde… FA01/FA 2/16/23 Air Lease Corp. 10-K 12/31/22 101:12M Workiva Inc Wde… FA01/FA 2/17/22 Air Lease Corp. 10-K 12/31/21 105:12M Workiva Inc Wde… FA01/FA 2/22/21 Air Lease Corp. 10-K 12/31/20 83:13M Toppan Merrill Bridge/FA |