As of June 30, 2022, the group had 392 aircraft in its owned fleet, with a net book value of $23.5 billion, a weighted average age of 4.4 years and a weighted average lease term remaining of 7.1 years.
Steven F. Udvar-Házy, Executive Chairman of the Board, said: “Passenger traffic growth remains on a very strong recovery trajectory, with international volume gaining meaningful momentum so far in 2022 – accordingly, lease placements from our order book are stretching further out into the future. Lease rates are strengthening, reflective of diminishing aircraft supply, increasing interest rates, and higher aircraft values,”
John L. Plueger, Chief Executive Officer and President commented: "We had a good second quarter with higher-than-expected aircraft deliveries and strong aircraft placements. Aircraft shortages and concerns about future new aircraft delivery delays are causing many airlines to secure lease extensions on existing aircraft, as pandemic recovery is well underway with airlines struggling to meet significant passenger demand,”
Second Quarter 2022 Results
The following table summarizes our operating results for the three and six months ended June 30, 2022 and 2021 (in millions, except per share amounts and percentages):
Operating Results
| Three Months Ended June 30, |
| Six Months Ended June 30, | |||||||||||||||||||||||||||
2022 |
| 2021 |
| $ change |
| % change |
| 2022 |
| 2021 |
| $ change |
| % change | ||||||||||||||||
Revenues | $ | 557.7 |
|
| $ | 491.9 |
|
| $ | 65.8 |
|
| 13.4 | % |
| $ | 1,154.4 |
|
| $ | 966.7 |
|
| $ | 187.7 |
|
| 19.4 | % | |
Operating expenses |
| (412.8 | ) |
|
| (377.3 | ) |
|
| (35.5 | ) |
| 9.4 | % |
|
| (808.8 | ) |
|
| (748.6 | ) |
|
| (60.2 | ) |
| 8.0 | % | |
Write-off of Russian fleet |
| — |
|
|
| — |
|
|
| — |
|
| — | % |
|
| (802.4 | ) |
|
| — |
|
|
| (802.4 | ) |
| 100.0 | % | |
Income/(loss) before taxes |
| 144.9 |
|
|
| 114.6 |
|
|
| 30.3 |
|
| 26.4 | % |
|
| (456.8 | ) |
|
| 218.1 |
|
|
| (674.9 | ) |
| (309.4 | )% | |
Net income/(loss) attributable to common stockholders | $ | 105.9 |
|
| $ | 85.6 |
|
| $ | 20.3 |
|
| 23.7 | % |
| $ | (373.6 | ) |
| $ | 165.8 |
|
| $ | (539.4 | ) |
| (325.3 | )% | |
Diluted earnings/(loss) per share | $ | 0.95 |
|
| $ | 0.75 |
|
| $ | 0.20 |
|
| 26.7 | % |
| $ | (3.32 | ) |
| $ | 1.45 |
|
| $ | (4.77 | ) |
| (329.0 | )% | |
Adjusted net income before income taxes(1) | $ | 154.5 |
|
| $ | 125.9 |
|
| $ | 28.6 |
|
| 22.7 | % |
| $ | 355.4 |
|
| $ | 243.1 |
|
| $ | 112.3 |
|
| 46.2 | % | |
Adjusted diluted earnings per share before income taxes(1) | $ | 1.39 |
|
| $ | 1.10 |
|
| $ | 0.29 |
|
| 26.4 | % |
| $ | 3.15 |
|
| $ | 2.13 |
|
| $ | 1.02 |
|
| 47.9 | % | |
Key Financial Ratios
| Three Months Ended June 30, |
| Six Months Ended June 30, | |||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | |
Pre-tax margin | 26.0% |
| 23.3% |
| (39.6)% |
| 22.6% | |
Pre-tax return on common equity (trailing twelve months) | (3.0)% |
| 8.5% |
| (3.0)% |
| 8.5% | |
Adjusted pre-tax margin(1) | 27.7% |
| 25.6% |
| 30.8% |
| 25.1% | |
Adjusted pre-tax return on common equity (trailing twelve months)(1) | 12.2% |
| 9.6% |
| 12.2% |
| 9.6% | |
(1) | Adjusted net income before income taxes, adjusted diluted earnings per share before income taxes, adjusted pre-tax margin and adjusted pre-tax return on common equity have been adjusted to exclude the effects of certain non-cash items, one-time or non-recurring items, such as write-offs of our Russian fleet, that are not expected to continue in the future and certain other items. See note 1 under the Consolidated Statements of Operations included in this earnings release for a discussion of the non-GAAP measures and a reconciliation to their most comparable GAAP financial measures. |
Highlights
Financial Overview
Our total revenues for the three months ended June 30, 2022 increased by 13.4% to $557.7 million as compared to the three months ended June 30, 2021. The increase in total revenues was primarily driven by the continued growth in our fleet and the recognition of cash basis revenue of $8.7 million as compared to $41.6 million of cash basis losses in the three months ended June 30, 2021. This increase was partially offset by the loss of rental revenue from the termination of our leasing activities in Russia during the first quarter of 2022 and lower aircraft sales, trading and other revenue. Lower aircraft sales, trading and other revenue was driven by $34.0 million in revenue recognized in the prior year related to the sale to a third party of certain unsecured claims related to Aeromexico’s insolvency proceedings. Our net income attributable to common stockholders for the three months ended June 30, 2022 was $105.9 million, or $0.95 per diluted share compared to $85.6 million, or $0.75 per diluted share, for the three months ended June 30, 2021. We recorded adjusted net income before income taxes during the three months ended June 30, 2022 of $154.5 million or $1.39 per adjusted diluted share, an increase of approximately 22.7% and 26.4% as compared to $125.9 million or $1.10 per adjusted diluted share for the three months ended June 30, 2021, respectively. The increase in net income attributable to common stockholders and adjusted net income before income taxes was primarily driven by the increase in revenues as discussed above.
Flight Equipment Portfolio
As of June 30, 2022 the net book value of our fleet increased to $23.5 billion, compared to $22.9 billion as of December 31, 2021. As of June 30, 2022, we owned 392 aircraft in our aircraft portfolio, comprised of 287 narrowbody aircraft and 105 widebody aircraft, and we managed 89 aircraft. The weighted average fleet age and weighted average remaining lease term of our fleet as of June 30, 2022 was 4.4 years and 7.1 years, respectively. We have a globally diversified customer base of 116 airlines in 62 countries.
The following table summarizes the key portfolio metrics of our fleet as of June 30, 2022 and December 31, 2021:
| June 30, 2022 |
| December 31, 2021 | |||
Net book value of flight equipment subject to operating lease | $ | 23.5 billion |
| $ | 22.9 billion | |
Weighted-average fleet age(1) | 4.4 years |
| 4.4 years | |||
Weighted-average remaining lease term(1) | 7.1 years |
| 7.2 years | |||
|
|
|
| |||
Owned fleet |
| 392 |
|
| 382 | |
Managed fleet |
| 89 |
|
| 92 | |
Aircraft on order |
| 430 |
|
| 431 | |
Total |
| 911 |
|
| 905 | |
|
|
|
| |||
Current fleet contracted rentals | $ | 15.0 billion |
| $ | 14.8 billion | |
Committed fleet rentals | $ | 16.3 billion |
| $ | 16.1 billion | |
Total committed rentals | $ | 31.3 billion |
| $ | 30.9 billion | |
(1) | Weighted-average fleet age and remaining lease term calculated based on net book value of our flight equipment subject to operating lease. |
The following table details the regional concentration of our flight equipment subject to operating leases:
| June 30, 2022 |
| December 31, 2021 | |
Region |
| % of Net Book Value |
| % of Net Book Value |
Europe |
| 31.3% |
| 32.5% |
Asia (excluding China) |
| 28.2% |
| 26.0% |
China |
| 12.2% |
| 12.8% |
The Middle East and Africa |
| 10.1% |
| 10.7% |
Central America, South America, and Mexico |
| 7.3% |
| 6.8% |
U.S. and Canada |
| 7.1% |
| 7.2% |
Pacific, Australia, and New Zealand |
| 3.8% |
| 4.0% |
Total |
| 100.0% |
| 100.0% |
The following table details the composition of our flight equipment subject to operating leases by aircraft type:
|
| June 30, 2022 |
| December 31, 2021 | ||||
Aircraft type |
| Number of Aircraft |
| % of Total |
| Number of Aircraft |
| % of Total |
Airbus A319-100 |
| 1 |
| 0.3% |
| 1 |
| 0.3% |
Airbus A320-200 |
| 28 |
| 7.1% |
| 31 |
| 8.1% |
Airbus A320-200neo |
| 26 |
| 6.6% |
| 23 |
| 6.0% |
Airbus A321-200 |
| 24 |
| 6.1% |
| 26 |
| 6.8% |
Airbus A321-200neo |
| 70 |
| 17.9% |
| 69 |
| 18.1% |
Airbus A330-200 |
| 13 |
| 3.3% |
| 13 |
| 3.4% |
Airbus A330-300 |
| 5 |
| 1.3% |
| 8 |
| 2.1% |
Airbus A330-900neo |
| 11 |
| 2.8% |
| 9 |
| 2.4% |
Airbus A350-900 |
| 13 |
| 3.3% |
| 12 |
| 3.1% |
Airbus A350-1000 |
| 6 |
| 1.5% |
| 5 |
| 1.3% |
Boeing 737-700 |
| 4 |
| 1.0% |
| 4 |
| 1.0% |
Boeing 737-800 |
| 84 |
| 21.4% |
| 88 |
| 23.0% |
Boeing 737-8 MAX |
| 39 |
| 9.9% |
| 28 |
| 7.3% |
Boeing 737-9 MAX |
| 10 |
| 2.7% |
| 7 |
| 1.8% |
Boeing 777-200ER |
| 1 |
| 0.3% |
| 1 |
| 0.3% |
Boeing 777-300ER |
| 24 |
| 6.1% |
| 24 |
| 6.3% |
Boeing 787-9 |
| 26 |
| 6.6% |
| 26 |
| 6.8% |
Boeing 787-10 |
| 6 |
| 1.5% |
| 6 |
| 1.6% |
Embraer E190 |
| 1 |
| 0.3% |
| 1 |
| 0.3% |
Total (1) |
| 392 |
| 100.0% |
| 382 |
| 100.0% |
(1) | As of June 30, 2022, we had six aircraft classified as flight equipment held for sale. As of December 31, 2021, we did not have any flight equipment classified as held for sale. |
Debt Financing Activities
We ended the second quarter of 2022 with total debt financing, net of discounts and issuance costs, of $18.3 billion. As of June 30, 2022, 92.4% of our total debt financing was at a fixed rate and 99.3% was unsecured. As of June 30, 2022, our composite cost of funds was 2.81%. We ended the second quarter with total liquidity of $7.6 billion.
As of the end of the periods presented, our debt portfolio was comprised of the following components (dollars in millions):
| June 30, 2022 |
| December 31, 2021 | |||||
Unsecured |
|
|
| |||||
Senior notes | $ | 17,686 |
|
| $ | 16,892 |
| |
Revolving credit facility |
| 520 |
|
|
| — |
| |
Term financings |
| 190 |
|
|
| 167 |
| |
Total unsecured debt financing |
| 18,396 |
|
|
| 17,059 |
| |
Secured |
|
|
| |||||
Term financings |
| 120 |
|
|
| 127 |
| |
Export credit financing |
| 15 |
|
|
| 18 |
| |
Total secured debt financing |
| 135 |
|
|
| 145 |
| |
|
|
|
| |||||
Total debt financing |
| 18,531 |
|
|
| 17,204 |
| |
Less: Debt discounts and issuance costs |
| (195 | ) |
|
| (182 | ) | |
Debt financing, net of discounts and issuance costs | $ | 18,336 |
|
| $ | 17,022 |
| |
Selected interest rates and ratios: |
|
|
| |||||
Composite interest rate(1) |
| 2.81 | % |
|
| 2.79 | % | |
Composite interest rate on fixed-rate debt(1) |
| 2.85 | % |
|
| 2.90 | % | |
Percentage of total debt at a fixed-rate |
| 92.4 | % |
|
| 94.8 | % | |
(1) | This rate does not include the effect of upfront fees, facility fees, undrawn fees or amortization of debt discounts and issuance costs. |