Air Lease will spend about $6.5 billion in 2019 to acquire 80 aircraft, as the company embarks on its largest expansion since it was established in 2010.
Executive chairman Steven Udvar-Hazy says the balance sheet will increase to over $20 billion in 2019 – or net growth of about one quarter after sales and depreciation.
During 2019 Air Lease will add four Airbus A350s, nine A330-900neos, 12 Boeing 787s, 25 Airbus A320neo family aircraft and 28 Boeing 737 Max jets. Additionally, Air Lease has agreed to purchase two A330-300s from a third party with the aircraft scheduled to deliver this year.
"That growth will be funded by a prudent combination of our liquidity, including operating cash flow, senior unsecured notes issuance, extending bank and CM access and aircraft sales," said chief executive and president John Plueger during an earnings call on 21 February.
He adds that the growth ahead "will be achieved without sacrificing [the company's] key financial metrics and investment-grade ratings".
In fact, the lease terms for the new deliveries will be about 12-years on average, while the aircraft sold will have shorter lease terms, Udvar-Hazy points out.
Air Lease will fund the deliveries with $3-4 billion of debt, $1 billion through aircraft sales and the balance from the company's operating cash flow, says chief financial officer Greg Willis.
Plueger notes on the call that work towards its third transaction is "ongoing", but adds that the company is not dependent on "any individual sales channel or structure such as the ABS market".
Willis details the capital expenditure schedule: $1.4 billion in the first quarter, $2.8 billion in the second quarter, $1.7 billion in the third quarter and $680 million in the fourth quarter.
Since Air Lease began issuing securitisations in 2016, it has discarded over 50% of its sales via three securitisations: Blackbird, Thunderbolt I, Thunderbolt II, according to its full-year results filing.
Air Lease has an orderbook totaling $26 billion, which Udvar-Hazy says represents only roughly 3% of the total capital needed to fund the industry's $800 billion of aircraft deliveries through 2023. "The needs in our industry are quite large," he says.
The Los Angeles-based lessor has about $1 billion of debt maturing in 2019, according to its full-year results filing. The company ended the year with liquidity of $4.3 billion and a debt-to-equity ratio of 2.4x.
In January 2019, Air Lease completed its inaugural $700 million issuance from its medium term note programme established in November.
CFO Willis says the company is committed to maintaining its financing strategy of 80% fixed rate debt and 90% unsecured debt.
As of 31 December, Air Lease had 275 aircraft, consisting of 207 narrowbodies and 68 widebodies. Compared with the prior year, the net book value increased by 18% to $15.7 billion.
Source: Cirium Dashboard