Key First Quarter 2020 Financial Metrics
- Total revenues were $282.5 million up 32.1%
- Total lease rental and direct financing and sales-type lease revenues were $205.7 million, up 8.4%
- Net loss was $(34.2) million due to merger related costs
Adjusted EBITDA(1) was $263.1 million up 32.0%
First Quarter 2020 Highlights
Closed previously announced merger with Marubeni Corporation and Mizuho Leasing in March
Fitch Ratings upgraded Aircastle’s senior unsecured debt rating to BBB from BBB-, while Moody’s and S&P affirmed our senior unsecured debt ratings at Baa3 and BBB- respectively
Acquired four narrow-body aircraft for $82.3 million; committed to acquire two additional narrow-bodies during 2020 for $38.5 million
Disposed of eight older narrow-body aircraft for proceeds of $150.0 million and a gain on sale of $27.0 million; this represents a margin on net sales proceeds of 18.0%
Liquidity
- As of April 30, 2020, total liquidity of $1.4 billion includes unrestricted cash of $348 million, $450 million of undrawn credit facilities and $540 million of projected operating cash flows through April 30, 2021
- Unencumbered flight equipment with a net book value of $5.8 billion
$814 million of total contractual commitments through April 30, 2021; includes $500 million of notes due in March 2021
Mike Inglese, Aircastle’s Chief Executive Officer, commented, “Our thoughts are with all who have been impacted by the COVID-19 crisis. The novel coronavirus has affected individuals, families, healthcare and other front line workers and first responders around the world.”
Mr. Inglese continued, “Aircastle is well positioned to work through the significant challenges posed by the crisis. We have always operated with minimal forward commitments, low balance sheet leverage and a very strong liquidity position. Because our contractual obligations are minimal, we estimate having the ability to cover our obligations by a comfortable margin over the next twelve months.”
Mr. Inglese concluded, “As a professional manager of commercial aircraft we, along with our new owners, Marubeni Corporation and Mizuho Leasing, will continue to have a long-term focus and remain responsible stewards of our fixed income investors’ capital. We are dedicated to maintaining a sensible, conservative and balanced capital allocation strategy in the years ahead.”
Aviation Assets
During the first quarter 2020, we acquired four aircraft for $82.3 million and currently have commitments to acquire two additional narrow-bodies in 2020 for $38.5 million.
As of March 31, 2020, Aircastle owned 274 aircraft having a net book value of $7.6 billion. We also manage nine aircraft with a net book value of $324 million dollars on behalf of our joint venture with Mizuho Leasing.
COVID-19
The novel coronavirus has dramatically reduced air traffic. The adverse economic impact caused by the virus suggests that a return to 2019 traffic levels will take time. IATA is now forecasting a 48% decline in revenue passenger kilometers in 2020 compared with 2019, and passenger revenues are estimated to be $314 billion lower.
In this challenging environment, most airline customers are seeking support from their lessor partners. Most of this support has come in the form of requests for payment deferrals and lease restructurings. While we feel that the major US airlines and the largest global flag carriers and low cost carriers are positioned to survive, we also anticipate bankruptcies and liquidations.
We are actively working with our lessees to support them in the short term in order to be better positioned with our airline customers during these unprecedented times. At the present time we have agreed to defer approximately 8.6% of the previous twelve month’s lease rental and direct finance and sales-type lease revenues. The deferrals are typically for three months and are structured to be repaid by year-end with interest.