Aircastle Announces Fourth Quarter and Full Year 2021 Results

Three Months ended February 28, 2022

• Net loss of $216 million primarily a result of $252 million net non-cash aircraft impairment charges for Russia-based aircraft⁽¹⁾
• Total revenues of $255 million and Adjusted EBITDA⁽²⁾ of $232 million
• Customer collections for the fourth quarter represented 103% of lease rental and direct financing and sales-type leases, excluding one-time Russia-related items
• Sold eight aircraft for proceeds of $83 million and a Gain on sale of flight equipment of $8 million
• Acquired six aircraft, including one A320neo, one A321neo and two Embraer E2 aircraft leased to KLM Cityhopper with a further Embraer E2 aircraft delivered to the airline in March

Full Year ended February 28, 2022

• Cash flows from operations increased 113% compared to fiscal year 2020
• Customer collections for fiscal year 2021 represented 95% of lease rental and direct financing and sales-type leases, excluding one-time Russia-related items
• Acquired eighteen aircraft during the fiscal year 2021, fourteen of which were new high-efficiency low-emission A320neo, 737-MAX, and E2 family aircraft
• Sold fifteen aircraft and other flight equipment for proceeds of $211 million and a total gain on sale of $26 million; average age of aircraft sold was 16 years
• Executed approximately 190 transactions for the fiscal year, comprised of lease agreements, purchases and sales

Liquidity

• As of April 1, 2022, total liquidity of $2.1 billion includes $1.4 billion of undrawn credit facilities, $0.2 billion of unrestricted cash, $0.1 billion of contracted asset sales, and $0.4 billion of projected adjusted operating cash flows through April 1, 2023
• We have 219 unencumbered aircraft with a net book value of $5.4 billion

STAMFORD, Conn., April 28, 2022 /PRNewswire/ -- Mike Inglese, Aircastle's Chief Executive Officer, commented, "Our fourth fiscal quarter opened with the Omicron variant and ended with the Russian invasion of Ukraine.  We repossessed two aircraft from one of our former Russian customers and we are tirelessly working on the remaining aircraft.  Despite this challenge, demand for travel elsewhere continues to improve and markets are opening, further proving the resiliency of the aircraft leasing sector."

Mr. Inglese concluded, "Aircastle remains focused on liquidity while moving forward with strategic, new-technology investments.  All aircraft lessors will manage through this crisis in Eastern Europe, but we believe our favorable credit rating, along with the opportunities afforded by our unique ownership arrangement with the Marubeni Corporation and Mizuho Leasing strategically position us for disciplined future growth."

Aviation Assets

As of February 28, 2022, Aircastle owned 251 aircraft and other flight equipment having a net book value of $6.5 billion.  We also manage nine aircraft with a net book value of $298 million on behalf of our joint venture with Mizuho Leasing. 

Russian Invasion of Ukraine

The Russian Federation invasion of the Ukraine has resulted in the closing of airspace in several countries as well as the placement of sanctions on a variety of Russian entities and certain activities involving Russia or Russian entities, such as the leasing of aircraft.  We have and will continue to fully comply with all applicable sanctions.

As of February 24, 2022, we had twelve aircraft on lease with six Russian airlines.  We have since terminated the leasing activities for all our Russian aircraft and have sought to repossess the aircraft and remove them from Russia. We have successfully repossessed two of the aircraft.  Nine remain in Russia and one is undergoing maintenance outside of Russia and is not operational.  It is unclear whether we will be able to recover the remaining aircraft or what the condition will be at the time of repossession or whether we will be able to recover the related technical records and documentation. Our one aircraft with a Ukrainian airline is in temporary storage outside of Ukraine. 

During the fourth quarter of 2021, we recorded net non-cash impairment charges of $251.9 million related to our Russian and Ukrainian aircraft⁽¹⁾.  These thirteen aircraft comprised 6% of our Net Book Value before impairment and 1% of our Net Book Value after.  They represented 7% of our lease rental and direct financing and sales-type lease revenue for the year ended February 28, 2022.  Basic lease rentals for our former Russian lessees were approximately $3.5 million for the month of February 2022.  The termination of our Russian leases will result in reduced revenues and operating cash flows.

We had letters of credit of $49.5 million as of February 28, 2022 related to our aircraft leased to Russian airlines. We have presented requests for payment to the various financial institutions and, as of April 25, 2022, we have received $25.4 million. We continue to work with other financial institutions toward receiving payments on the remaining letters of credit.  We intend to pursue all available legal claims concerning these letters of credit but the timing and amount of any payments under these remaining letters of credit are uncertain.

We have insurance, through the airlines' re-insurance and our own policies, which we believe provide coverage if we are unable to recover our aircraft. We have filed claims against relevant insurance and reinsurance policies seeking an indemnity of approximately $350 million.  Our claims are subject to the terms of the applicable policies and given the unprecedented scenario and the magnitude of potential claims, insurers and reinsurers may raise various defenses. Accordingly, at this stage we can give no assurance as to when or what amounts we may ultimately collect.

Update on COVID-19 Pandemic

Even as the airline industry begins to recover, airlines continue to seek support from their respective governments, raise debt and equity, request concessions from lessors, and in certain cases, seek judicial protection. While we continued to receive requests from our customers for lease concessions, deferrals or restructurings, the number of requests during fiscal year 2021 has declined compared to 2020.  As of February 28, 2022, we had deferred rent receivables of $55.5 million related to nine customers.  Approximately 93% of these deferrals have been agreed to as part of broader lease restructurings, which generally include term extensions, better security packages, or other considerations in exchange for near-term economic concessions. 

We hold $460 million of maintenance reserves and $69 million of security deposits, as well as an additional $142 million in letters of credit from our lessees.  These total $671 million, represent 10% of our net book value of flight equipment and provide significant protection against potential future airline failures and the unscheduled return of additional aircraft.

Conference Call

In connection with this press release, management will host a conference call on Thursday, April 28, 2022, at 9:00 A.M. Eastern Time.  All interested parties are welcome to participate on the live call.  The conference call can be accessed by dialing (888) 220-8451 (from within the U.S. and Canada) or (786) 789-4776 (from outside of the U.S. and Canada) ten minutes prior to the scheduled start and referencing the passcode "6158234".

A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.aircastle.com.  Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast. 

For those who are not available to listen to the live call, a replay will be available until 12:00 P.M. Eastern Time on Thursday, May 28, 2022, by dialing (888) 203-1112 (from within the U.S. and Canada) or (719) 457-0820 (from outside of the U.S. and Canada); please reference passcode "6158234".

About Aircastle Limited

Aircastle Limited acquires, leases, and sells commercial jet aircraft to airlines throughout the world.  As of February 28, 2022, Aircastle owned and managed on behalf of its joint ventures 260 aircraft leased to 81 customers located in 45 countries.

Safe Harbor

All statements in this press release, other than characterizations of historical fact, are forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995.  Examples of forward-looking statements include, but are not necessarily limited to, statements relating to our proposed public offering of notes and our ability to acquire, sell, lease or finance aircraft, raise capital, pay dividends, and increase revenues, earnings, EBITDA and Adjusted EBITDA and the global aviation industry and aircraft leasing sector. Words such as "anticipates," "expects," "intends," "plans," "projects," "believes," "may," "will," "would," "could," "should," "seeks," "estimates" and variations on these words and similar expressions are intended to identify such forward-looking statements.  These statements are based on our historical performance and that of our subsidiaries and on our current plans, estimates and expectations and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements; Aircastle can give no assurance that its expectations will be attained.  Accordingly, you should not place undue reliance on any such forward-looking statements which are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this press release.  These risks or uncertainties include, but are not limited to, those described from time to time in Aircastle's filings with the SEC and previously disclosed under "Risk Factors" in Item 1A of Aircastle's most recent Form 10-K and any subsequent filings with the SEC.  In addition, new risks and uncertainties emerge from time to time, and it is not possible for Aircastle to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements.  Such forward-looking statements speak only as of the date of this press release.  Aircastle expressly disclaims any obligation to revise or update publicly any forward-looking statement to reflect future events or circumstances. 

We define EBITDA as income (loss) from continuing operations before income taxes, interest expense, and depreciation and amortization. We use EBITDA to assess our consolidated financial and operating performance, and we believe this non-U.S. GAAP measure is helpful in identifying trends in our performance.

This measure provides an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current financial goals, as well as achieving optimal financial performance. It provides an indicator for management to determine if adjustments to current spending decisions are needed.

EBITDA provides us with a measure of operating performance because it assists us in comparing our operating performance on a consistent basis as it removes the impact of our capital structure (primarily interest charges on our outstanding debt) and asset base (primarily depreciation and amortization) from our operating results. Accordingly, this metric measures our financial performance based on operational factors that management can impact in the short-term, namely the cost structure, or expenses, of the organization. EBITDA is one of the metrics used by senior management and the Board of Directors to review the consolidated financial performance of our business.

We define Adjusted EBITDA as EBITDA (as defined above) further adjusted to give effect to adjustments required in calculating covenant ratios and compliance as that term is defined in the indenture governing our senior unsecured notes. Adjusted EBITDA is a material component of these covenants.

Contact:
Aircastle Advisor LLC
Jim Connelly, SVP ESG & Corporate Communications
Tel: +1-203-504-1871
[email protected]

SOURCE Aircastle Limited