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Air Lease (AL) Fleet Strength Drives Growth, Cost Woes Stay

Zacks Equity Research
·2-min read

Air Lease Corporation’s AL top line is benefiting from continuous growth in its fleet. Notably, total revenues jumped 13.4% year over year in the second quarter of 2022. The company took delivery of a total of 21 aircrafts, representing approximately $1.4 billion in aircraft investments during the second quarter of 2022. As of Jun 30, 2022, Air Lease’s fleet included 392 owned and 89 managed aircraft, with 430 new aircraft orders from Boeing and Airbus.

Revenues from the rental of flight equipment climbed 20.6% year over year to $545.27 million in the reported quarter. As of Jun 30, 2022, Air Lease owned 392 aircraft with a net book value of $23.5 billion. The total fleet size at the end of the second quarter was 911 (including the owned fleet of 392) compared with 908 at the end of March 2022.

Strong freight and cargo markets are supporting demand for the company’s wide-body passenger aircraft. The continued recovery in airline operations is further driving lease demand. A higher lease demand, coupled with rising interest rates and inflation, indicates a rising lease rate environment, which bodes well for Air Lease.

The company’s efforts to reward its shareholders are encouraging. During the first half of 2022, Air Lease completed its previously announced $150 million share buyback program by repurchasing 3.4 million shares.

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However, rising operating expenses pose a threat to Air Lease’s bottom line. The total operating expenses jumped 8% year over year in the first half of 2022. The depreciation of flight equipment costs rose 10.3%. Selling, general and administrative expenses increased 32.9% year over year in the period.

Some other companies from the same space facing higher operating expenses include Ryder System, Inc. R and Trinity Industries, Inc. TRN.

During the first half of 2022, Ryder System witnessed a 22.3% year-over-year increase in its total operating expenses. Trinity Industries' operating expenses jumped 61.5% year over year in the same time.


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Zacks Investment Research