• Revenue: $713 million for Q4 2024.
• Diluted Earnings Per Share: $0.83 for Q4 2024.
• Fleet Expansion: Purchased 18 new aircraft, adding $1.3 billion in flight equipment.
• Aircraft Sales: Sold 14 aircraft for approximately $540 million, generating $65 million in gains.
• Fleet Utilization: 100% utilization rate.
• Lease Extensions: Executed lease extensions on 23 single aisle aircraft with higher lease rates.
• Interest Expense: Increased by $38 million year over year, with a composite cost of funds at 4.14%.
• Debt to Equity Ratio: 2.68 times on a GAAP basis, approximately 2.6 times net of cash.
• Liquidity Position: $8.1 billion as of quarter end.
• Sales Pipeline: $1.1 billion with an expected sales outlook of about $1.5 billion for 2025.

• Warning! GuruFocus has detected 7 Warning Signs with AL.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Air Lease Corp (NYSE:AL) reported record revenues and fleet size for the full year 2024, indicating strong business performance.
• The company successfully purchased 18 new aircraft, adding $1.3 billion in flight equipment to its balance sheet, and sold 14 aircraft for approximately $540 million.
• Fleet utilization remained robust at 100%, showcasing efficient management of assets.
• Lease extensions on single-aisle aircraft resulted in higher lease rates, indicating strong demand and favorable market conditions.
• Air Lease Corp (NYSE:AL) anticipates reduced funding needs from debt capital markets in 2025 due to lower forecast expenditures on new aircraft deliveries.

Negative Points

• Interest rates have not fallen as rapidly as expected, which could impact financial performance.
• The company faces potential challenges from Boeing's production efforts, as 80% of 2025 deliveries are expected to be Boeing aircraft.
• End-of-lease revenue was significantly lower compared to the prior period, impacting rental revenue.
• Interest expense rose due to increased financing costs and higher debt balances, affecting profitability.
• The ongoing litigation regarding the Russia fleet insurance claims remains unresolved, posing a potential risk.

Q & A Highlights

Q: Can you walk us through what you think will get Air Lease Corp back to mid-teen adjusted pre-tax ROEs seen before the pandemic? A: John Plueger, CEO, stated that achieving mid-teen ROEs is expected within two to three years, considering positive factors and headwinds. Greg Willis, CFO, added that the timing of interest and lease rates will play a crucial role, but there are no impediments to reaching the ROE target over time.

Q: Should we expect the net spread margin to increase similarly to the fleet lease yield over the next few years? A: Greg Willis, CFO, mentioned that for 2025, margins are expected to be around the same levels as 2024, largely dependent on interest rates. Lease yields are expected to steadily increase, but it will take time to reflect in the business.

Q: Have you considered increasing aircraft sales in the current strong market to prove the value proposition of the equity? A: Greg Willis, CFO, indicated that Air Lease plans to maintain sales at about $1.5 billion in 2025, similar to 2024. Sales are largely opportunistic, and while they are open to increasing sales if compelling reasons arise, the current plan is to maintain the current level.

Q: Are lease renewals getting better in the current environment, and how do you see this impacting future lease rates? A: John Plueger, CEO, confirmed that lease renewals are improving, with higher rates on single-aisle aircraft and stable rates on wide bodies. This trend is expected to continue into 2025, contributing to stronger lease yields.

Q: Given the current stock price, what would be the top priority for capital deployment once Air Lease reaches its leverage target? A: John Plueger, CEO, stated that a stock buyback is a strong possibility given the current compelling value of the stock. However, the final decision will be made once the target debt-to-equity ratio is achieved.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.