On November 7, 2024, Air Lease Corp (AL, Financial) released its 8-K filing detailing the financial results for the third quarter of 2024. The company, a prominent aircraft leasing firm based in the United States, primarily generates revenue from the Asia region by leasing aircraft from manufacturers like Boeing and Airbus to airlines worldwide.
Performance Overview
Air Lease Corp reported a revenue of $690.2 million for the third quarter of 2024, surpassing the analyst estimate of $676.82 million. This marks a 4.7% increase from the $659.4 million reported in the same quarter last year. However, the company's earnings per share (EPS) fell to $0.82, missing the analyst estimate of $0.85 and declining from $1.10 in the previous year, reflecting a 25.5% decrease.
Financial Achievements and Challenges
The company highlighted strong demand for commercial aircraft, with rising lease rates and significant gains from fleet sales. The net book value of Air Lease Corp's fleet increased to $27.9 billion, up from $26.2 billion at the end of 2023. Despite these achievements, the company faced challenges with increased operating expenses and higher interest costs, which impacted net income.
“Demand for commercial aircraft remains high, and we are continuing to place aircraft at rising lease rates, while also harvesting solid gains on sales from our existing fleet – underscoring the deep value embedded in our young $28 billion fleet and $18 billion forward orderbook,” said John L. Plueger, Chief Executive Officer and President, and Steven F. Udvar-Házy, Executive Chairman of the Board.
Income Statement and Key Metrics
Operating expenses rose by 13.3% to $559.9 million, contributing to a decrease in income before taxes by 21.1% to $130.2 million. The net income attributable to common stockholders was $91.6 million, a 24.9% decline from the previous year. The adjusted net income before income taxes was $140.2 million, down from $177.0 million, primarily due to increased interest expenses.
| Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Revenue | $690.2 million | $659.4 million | 4.7% |
| Net Income | $91.6 million | $122.0 million | -24.9% |
| Diluted EPS | $0.82 | $1.10 | -25.5% |
Balance Sheet and Cash Flow
Air Lease Corp ended the quarter with total assets of approximately $32 billion and a fleet of 485 owned aircraft. The company maintained a strong liquidity position with $7.5 billion in total liquidity. Debt financing, net of discounts and issuance costs, stood at $20.2 billion, with 81% of the debt at a fixed rate.
Analysis and Outlook
While Air Lease Corp's revenue growth and fleet expansion highlight its robust market position, the decline in net income and EPS underscores the challenges posed by rising costs and interest expenses. The company's ability to manage these expenses while capitalizing on high demand for aircraft will be crucial for future performance. The increase in the quarterly cash dividend by 5% to $0.22 per share reflects confidence in its cash flow generation capabilities.
Overall, Air Lease Corp's performance in Q3 2024 demonstrates resilience in revenue growth amidst financial challenges, positioning it well for continued expansion in the global aircraft leasing market.
Explore the complete 8-K earnings release (here) from Air Lease Corp for further details.
