Willis Lease Finance reduced its third-quarter net loss to $2.2 million compared with a net loss of $8 million in the year-earlier period.
A $1.9 million profit was realised in the quarter from the sale of aircraft and engines to Island Air
, says Willis in an earnings statement.
An improvement in portfolio utilisation in the current quarter was overshadowed by asset write-downs and engine repair expenses, says the lessor. A year ago, the same quarter’s results were impacted by a $15.4 million charge for the extinguishment of debt and derivatives termination related to the closing of the WEST II financing.
Total revenues improved 1.2% to $38 million. Lease rent revenues increased 12% to $25.8 million compared to $23 million a year ago.
"Leasing activity in September was robust, with a significant number of new leases signed, lifting our utilisation to 88%, a level we haven’t seen for nearly three years," says Donald Nunemaker, president of Willis in an earnings statement. "One of the factors contributing to the improvement in utilisation is that the market for V2500-A5 engines, which powers the A320 aircraft type, appears to be coming back to normal in terms of supply and demand. We had eight of these engines off-lease in early 2012 and have only two of these engines available for lease today."
"The $2.2 million loss in the current quarter was mainly due to the write-down of certain assets and the expensing of engine repairs," says Charles Willis, chairman and chief executive. "The non-cash write-downs totalled $4.3 million, representing 0.4% of our total asset base, consisting of a $2.6 million write-down of parts inventories related to engines we consigned to third parties in the past, and a $1.7 million write-down of two engines we decided to part out. We also expensed $2.2 million in the period for engine repairs completed on two engines in our lease portfolio. We feel the above actions are appropriate to maintain a vibrant and suitably valued portfolio. The foregoing expenses overshadowed an otherwise profitable quarter – excluding these charges, third quarter pre-tax income was $2.9 million."
Liquidity available from the revolving credit facility was $138 million at quarter end compared with $111 million in the second quarter of 2013 and $159 million a year ago.