Le Lézard
Classified in: Tourism and vacations, Transportation, Business, Covid-19 virus
Subjects: ERN, ERP

Aircastle Announces Fourth Quarter and Full Year 2020 Results


STAMFORD, Conn., April 21, 2021 /PRNewswire/ --

Key Financial Metrics for the Three Months ended February 28, 2021

Highlights

Liquidity

(1)

Refer to the selected financial information accompanying this press release for a reconciliation of GAAP to Non-GAAP numbers.

Mike Inglese, Aircastle's Chief Executive Officer, commented, "While 2020 was a challenging year for the aviation industry, we have strong conviction that the long-term fundamentals for air travel are intact.  Although there are still challenges ahead in the near term, as the vaccine rollout continues, we believe global travel will begin to normalize.  Aircastle's fleet of modern, fuel-efficient aircraft remains desirable to the well managed airlines who will survive the COVID crisis, and our predominantly single-aisle aircraft investments will benefit from a recovery that will be driven by domestic, leisure market demand." 

Mr. Inglese continued, "Airlines around the world have added significant financial leverage throughout the crisis, and this will impact their access to capital and make leasing increasingly important to all airlines as a fundamental source of financing.  As the recovery unfolds, our experienced management team working with our long-term oriented shareholders, Marubeni Corporation and Mizuho Leasing, will allow Aircastle to resume profitable and disciplined long-term growth."   

Aviation Assets
As of February 28, 2021, Aircastle owned 252 aircraft and other flight equipment having a net book value of $6.7 billion.  We also manage nine aircraft with a net book value of $312 million dollars on behalf of our joint venture with Mizuho Leasing.

Owned Aircraft

As of
Feb. 28, 2021(1)


As of
Feb. 29, 2020(1)

Net Book Value of Flight Equipment ($ mils.)

$

6,688



$

7,569


Net Book Value of Unencumbered Flight Equipment ($ mils.)

$

5,432



$

5,829


Number of Aircraft

252



272


Number of Unencumbered Aircraft

219



232


Number of Lessees

75



85


Number of Countries

43



47


Weighted Average Fleet Age (years)(2)

10.6



10.0


Weighted Average Remaining Lease Term (years)(2)

4.2



4.7


Weighted Average Fleet Utilization for the quarter ended(3)

93.7

%


N/A






Managed Aircraft on behalf of Joint Ventures




Net Book Value of Flight Equipment ($ mils.)

$

312



$

326


Number of Aircraft

9



9


____________________

(1)

Calculated using net book value of flight equipment held for lease and net investment in leases at period end.

(2)

Weighted by net book value.

(3)

Aircraft on-lease days as a percent of total days in period weighted by net book value.

Deferrals
In the current environment airlines have sought support from their lessor partners.  These requests have generally come in the form of payment deferrals and lease restructurings.  As of April 15, 2021, seven of our airline customers were subject to judicial insolvency proceedings or similar protection.  We lease 23 aircraft to these customers, which comprise 14% of our net book value of flight equipment and 12% of our reported lease rental and direct financing and sales-type lease revenues for the twelve months ended February 28, 2021.  While we anticipate that there may be additional airline bankruptcies and liquidations in future periods, we remain confident that our core customers who are the major US and global carriers, as well as the largest low-cost carriers, have the means to survive the COVID-19 crisis.  

We continue to grant deferrals to help certain clients manage through the crisis.  As of April 15, 2021, we had executed or approved deferral arrangements with 26 airlines representing 35% of our customer base.  The amount currently deferred is $108 million, of which $87 million is included in our February 28, 2021 Consolidated Balance Sheet.  This represented approximately 17% of our reported lease rental and direct financing and sales-type lease revenues for the twelve months ended February 28, 2021. 

In addition to $519 million of maintenance reserves, $81 million of security deposits and $58 million of lease rents that have been paid in advance, we hold an additional $151 million in letters of credit from our lessees.  These combined reserves total $809 million and provide significant protection against potential future airline failures and the unscheduled return of additional aircraft.   

Impairment of Aircraft
During the fourth quarter we recorded non-cash impairment charges totaling $126 million primarily related to four narrow-body and four A330 wide-body aircraft.  Partially offsetting these fourth quarter charges were total combined maintenance revenues and gains from the sale of flight equipment totaling $61 million for the quarter.  For the full year, non-cash impairment charges related to 26 aircraft and other flight equipment totaled $426 million.  The impairment charges were partially offset by combined maintenance revenue and gains from the sale of flight equipment which totaled $206 million for the year. 

New Fiscal Year End
We changed our fiscal year end to the twelve-month period ending on the last day in February, beginning February 28, 2021.  This change better aligns our financial reporting with the financial reporting cycle of our shareholders, Marubeni Corporation and Mizuho Leasing Company, Limited.  

Conference Call
In connection with this press release, management will host a conference call on Wednesday, April 21, 2021, at 9:00 A.M. Eastern Time.  All interested parties are welcome to participate on the live call.  The conference call can be accessed by dialing (800) 437-2398 (from within the U.S. and Canada) or (720) 452-9102 (from outside of the U.S. and Canada) ten minutes prior to the scheduled start and referencing the passcode "6228518".

A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.aircastle.com.  Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast. 

For those who are not available to listen to the live call, a replay will be available until 12:00 P.M. Eastern Time on Friday, May 21, 2021, by dialing (888) 203-1112 (from within the U.S. and Canada) or (719) 457-0820 (from outside of the U.S. and Canada); please reference passcode "6228518".

About Aircastle Limited
Aircastle Limited acquires, leases, and sells commercial jet aircraft to airlines throughout the world.  As of February 28, 2021, Aircastle owned and managed on behalf of its joint ventures 261 aircraft leased to 75 customers located in 43 countries.

Safe Harbor
All statements in this press release, other than characterizations of historical fact, are forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, but are not necessarily limited to, statements relating to our proposed public offering of notes and our ability to acquire, sell, lease or finance aircraft, raise capital, pay dividends, and increase revenues, earnings, EBITDA and Adjusted EBITDA and the global aviation industry and aircraft leasing sector. Words such as "anticipates," "expects," "intends," "plans," "projects," "believes," "may," "will," "would," "could," "should," "seeks," "estimates" and variations on these words and similar expressions are intended to identify such forward-looking statements. These statements are based on our historical performance and that of our subsidiaries and on our current plans, estimates and expectations and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements; Aircastle can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any such forward-looking statements which are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this press release. These risks or uncertainties include, but are not limited to, those described from time to time in Aircastle's filings with the SEC and previously disclosed under "Risk Factors" in Item 1A of Aircastle's most recent Form 10-K and any subsequent filings with the SEC.  In addition, new risks and uncertainties emerge from time to time, and it is not possible for Aircastle to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. Aircastle expressly disclaims any obligation to revise or update publicly any forward-looking statement to reflect future events or circumstances.   

Aircastle Limited and Subsidiaries

Consolidated Balance Sheets

(Dollars in thousands, except share data)



February 28,
2021


February 29,
2020


December 31,
2019

ASSETS






Cash and cash equivalents

$          578,004


$          166,083


$          140,882

Restricted cash and cash equivalents

2,594


5,354


14,561

Accounts receivable

82,572


27,269


18,006

Flight equipment held for lease, net of accumulated depreciation of
$2,076,972, $1,542,938, and $1,501,664 respectively

6,492,471


7,142,987


7,375,018

Net investment in leases, net of allowance for credit losses of $864, $6,558
and $0, respectively

195,376


426,252


419,396

Unconsolidated equity method investments

35,377


33,470


32,974

Other assets

311,944


206,617


201,209

   Total assets

$       7,698,338


$       8,008,032


$       8,202,046







LIABILITIES AND SHAREHOLDERS' EQUITY






LIABILITIES






Borrowings from secured financings, net of debt issuance costs

$          768,850


$       1,012,518


$       1,129,345

Borrowings from unsecured financings, net of debt issuance costs

4,366,261


3,884,235


3,932,491

Accounts payable, accrued expenses and other liabilities

174,267


207,114


172,114

Lease rentals received in advance

58,013


107,944


108,060

Security deposits

80,699


109,663


124,954

Maintenance payments

519,178


650,369


682,398

   Total liabilities

5,967,268


5,971,843


6,149,362







SHAREHOLDER'S EQUITY






Preference shares, $0.01 par value, 50,000,000 shares authorized, no shares
issued and outstanding

-


-


-

Common shares, $0.01 par value, 250,000,000 shares authorized, 14,048
shares issued and outstanding at February 28, 2021; and 75,076,794 shares

issued and outstanding at February 29, 2020 and 75,122,129 shares issued
and outstanding at December 31, 2019

-


751


751

Additional paid-in capital

1,485,777


1,456,977


1,446,664

Retained earnings

245,293


578,461


605,269

   Total shareholders' equity

1,731,070


2,036,189


2,052,684







   Total liabilities and shareholders' equity

$       7,698,338


$       8,008,032


$       8,202,046

 

Aircastle Limited and Subsidiaries

Consolidated Statements of Income (Loss)

(Dollars in thousands)



Three Months
Ended
February 28,


Three Months
Ended
December 31,


Twelve

Months Ended
February 29,


Twelve
Months Ended
December 31,


2021


2019


2020


2019

Revenues:








Lease rental revenue

$        137,855


$        200,341


$        611,421


$        777,403

Net investment in lease revenue

3,312


7,302


18,215


32,295

Amortization of lease premiums, discounts and incentives

(5,481)


(5,685)


(22,842)


(22,636)

Maintenance revenue

51,161


20,924


172,668


74,987

Total lease revenue

186,847


222,882


779,462


862,049

Gain on sale of flight equipment

9,355


20,101


33,536


45,532

Other revenue

1,328


747


19,290


10,357

Total revenues

197,528


243,730


832,288


917,938









Operating expenses:




Depreciation

84,711


90,711


347,517


356,021

Interest, net

61,343


62,969


235,338


258,070

Selling, general and administrative (including non-cash share-

based payment expense of $0, $6,627, $28,049 and $15,830
respectively)

17,517


22,761


93,671


77,034

Impairment of flight equipment

126,028


-


425,579


7,404

Maintenance and other costs

5,961


4,961


20,005


24,828

Total operating expenses

$        295,560


$        181,402


$     1,122,110


$        723,357









Other (expense):




Gain (Loss) on extinguishment of debt

(2,532)


-


(2,640)


(7,577)

Merger expenses

(113)


(7,372)


(32,605)


(7,372)

Other

-


(263)


(191)


(4,492)

Total other income (expense)

(2,646)


(7,635)


(35,436)


(19,441)









Income (loss) from continuing operations before income taxes
and earnings (loss) of unconsolidated equity method investments

(100,678)


54,693


(325,258)


175,140

Income tax provision (benefit)

(4,502)


8,072


10,236


22,667

Earnings (loss) of unconsolidated equity method investments,
net of tax

348


697


2,326


4,102

Net income (loss)

$        (95,828)


$          47,318


$      (333,168)


$        156,575

 

Aircastle Limited and Subsidiaries

Consolidated Statements of Cash Flows

(Dollars in thousands)



Twelve Months
Ended
February 28,


Twelve Months
Ended
December 31,


2021


2019

Cash flows from operating activities:




Net income (loss)

$         (333,168)


$          156,575

Adjustments to reconcile net income (loss) to net cash and restricted cash provided by




  Depreciation

347,517


356,021

  Amortization of deferred financing costs

14,791


14,578

  Amortization of lease premiums, discounts and incentives

22,842


22,636

  Deferred income taxes

6,506


20,223

  Non-cash share-based payment expense

28,049


15,830

  Cash flow hedges reclassified into earnings

-


184

  Collections on net investment in leases

16,859


25,842

  Security deposits and maintenance payments included in earnings

(135,115)


(49,029)

  Gain on sale of flight equipment

(33,536)


(45,532)

  Loss on extinguishment of debt

2,640


7,577

  Impairment of flight equipment

425,579


7,404

  Provision for credit losses

5,258


-

  Other

(2,305)


206

  Changes in certain assets and liabilities:




    Accounts receivable

(50,647)


(13,162)

    Other assets

(72,935)


2,594

    Accounts payable, accrued expenses and other liabilities

(13,655)


(5,483)

    Lease rentals received in advance

(53,658)


19,954

      Net cash and restricted cash provided by operating activities

175,022


536,418

Cash flows from investing activities:




  Acquisition and improvement of flight equipment

(145,589)


(1,172,370)

  Proceeds from sale of flight equipment

180,342


361,747

  Aircraft purchase deposits and progress payments, net of returned deposits and aircraft
sales deposits

(13,024)


760

  Unconsolidated equity method investments and associated costs

-


(15,175)

  Distributions from unconsolidated equity method investment in excess of earnings

419


36,750

  Other

(676)


4,259

      Net cash and restricted cash provided by (used in) investing activities

21,472


(784,029)

Cash flows from financing activities:




  Repurchase of shares

(25,536)


(36,739)

  Parent contribution at Merger

25,536


-

  Proceeds from secured and unsecured debt financings

1,932,943


2,116,848

  Repayments of secured and unsecured debt financings

(1,697,662)


(1,817,558)

  Deferred financing costs

(12,832)


(13,800)

  Debt extinguishment costs

(1,524)


(7,183)

  Security deposits and maintenance payments received

87,510


202,833

  Security deposits and maintenance payments returned

(71,743)


(117,872)

  Dividends paid

(24,025)


(91,328)

      Net cash and restricted cash provided by financing activities

212,667


235,201

Net increase (decrease) in cash and restricted cash:

409,161


(12,410)

Cash and restricted cash at beginning of year

171,437


167,853





Cash and restricted cash at end of year

$          580,598


$          155,443

 

Aircastle Limited and Subsidiaries

Reconciliation of GAAP to non-GAAP Measures

EBITDA and Adjusted EBITDA Reconciliation

(Dollars in thousands)



Three Months
Ended
February 28,
2021


Three Months
Ended
December 31,
2019


Twelve Months
Ended
February 28,
2021


Twelve Months
Ended
December 31,
2019









 Net income (loss) 

$           (95,828)


$            47,318


$         (333,168)


$          156,575

 Depreciation 

84,711


90,711


347,517


356,021

 Amortization of lease premiums, discounts
 and incentives 

5,481


5,685


22,842


22,636

 Interest, net 

61,343


62,969


235,338


258,070

 Income tax provision (benefit) 

(4,502)


8,072


10,236


22,667

      EBITDA 

51,205


214,755


282,765


815,969

 Adjustments: 








   Impairment of Aircraft 

126,028


-


425,579


7,404

   Equity share of joint venture impairment 

-


-


-


2,724

   Loss on Extinguishment of debt 

2,532


-


2,640


7,577

   Non-cash share based payment expense 

-


6,627


28,049


15,830

   Merger related expense * 

114


7,886


35,165


7,886

   Loss on MTM of interest rate derivative contracts 

-


263


19


4,771

    Contract termination expense 

-


-


172


-

      Adjusted EBITDA 

$          179,879


$          229,531


$          774,389


$          862,161


* Included $32.6 million in Other expense and $2.6 million in Selling, general and administrative expenses.


We define EBITDA as income (loss) from continuing operations before income taxes, interest expense, and depreciation and amortization. We use EBITDA to assess our consolidated financial and operating performance, and we believe this non-U.S. GAAP measure is helpful in identifying trends in our performance.


This measure provides an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current financial goals, as well as achieving optimal financial performance. It provides an indicator for management to determine if adjustments to current spending decisions are needed.


EBITDA provides us with a measure of operating performance because it assists us in comparing our operating performance on a consistent basis as it removes the impact of our capital structure (primarily interest charges on our outstanding debt) and asset base (primarily depreciation and amortization) from our operating results. Accordingly, this metric measures our financial performance based on operational factors that management can impact in the short-term, namely the cost structure, or expenses, of the organization. EBITDA is one of the metrics used by senior management  and the Board of Directors to review the consolidated financial performance of our business.


We define Adjusted EBITDA as EBITDA (as defined above) further adjusted to give effect to adjustments required in calculating covenant ratios and compliance as that term is defined in the indenture governing our senior unsecured notes. Adjusted EBITDA is a material component of these covenants.

Contact:
Aircastle Advisor LLC
Frank Constantinople, SVP Investor Relations
Tel: +1-203-504-1063
[email protected]

(PRNewsfoto/Aircastle Limited)

 

SOURCE Aircastle Limited


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