Ireland’s FLY Leasing builds toward $750 million acquisition goal

Dublin-based FLY Leasing continued to boost its fleet and shore up equity in the second quarter, aiming to meet its $750 million acquisition goal by the end of 2017.

FLYacquired five aircraft during the quarter, including four that were new deliveries from manufacturers, a $290 million investment. The four new aircraft included a Boeing 787 on a 12-year lease to an unidentified European airline; a 737 MAX 8 on a 12-year lease to Indonesian low-cost carrier (LCC) Lion Air; a 737-800 on a 10-year lease to Turkish Airlines; and an Airbus A320-200 on a 12-year lease to an unidentified Asian airline. FLY has not identified the lessee for the fifth aircraft, which was a 737, its model-type unspecified.

“The five aircraft are on leases with an average term of 11 years, further enhancing the overall quality of our fleet,” FLY CEO Colm Barrington said. “We expect to see improved earnings from these aircraft … as the year progresses.”

As of June 30, the company’s portfolio comprised 81 aircraft, on lease to 45 airlines in 29 countries, with an average age of 6.8 years. At the end of the quarter the fleet was generating annualized rental revenue of about $352 million, the company said, with 100% of the portfolio leased and utilized during the second quarter.

FLY reported $2.9 million in net income for the second quarter of 2017, down 38.4% from $4.7 million a year ago. Revenues were up 2.4% year-over-year to $79.8 million as the company reported a 10% increase in operating lease rental revenue, offset by a complete lack of end of lease revenue for the quarter (compared to $4.9 million in end of lease revenue in 2Q 2016). Expenses totaled $76 million for the quarter, up 7% year-over-year as depreciation expenses rose 15.4% and maintenance costs increased 67%. FLY’s operating income for the quarter was $3.8 million, down 47.2% from a year ago.

The company is in the midst of share repurchasing push. As of June 30, FLY had repurchased 2.1 million shares for approximately $27.2 million. Following the end of the quarter through Aug. 9, the company has repurchased an additional 740,957 shares for approximately $10.2 million. The company has approximately $29 million authorized for remaining share repurchases this year.

“FLY continues to aggressively repurchase its shares … our average repurchase price of just over $13 per share has helped increase our net book value per share this year to $19.08,” Barrington said. “We are focused on growth and have a strong pipeline of attractive aircraft investments … in the coming months. We expect to meet our $750 million acquisition target in 2017, and we have the financial resources to acquire an additional $2 billion of aircraft.”

As of June 30, FLY’s assets totaled $3.5 billion, including $3 billion in aircraft and flight equipment. The company’s total cash was $455.2 million, of which $335.5 million was unrestricted. FLY’s fleet at the end of the quarter comprised 13 Airbus A320s, nine A319s, three A321s, three A330s, two A340s, and 41 Boeing 737s, five 787s, three 757s and two 777s.