AIR LEASE CORP [AL] Filings

10-Q 1 al-20220630.htm 10-Q al-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-35121

AIR LEASE CORPORATION

(Exact name of registrant as specified in its charter)


Delaware						27-1840403
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


2000 Avenue of the Stars,	Suite 1000N	90067
Los Angeles,	California
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (310) 553-0555

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock	AL	New York Stock Exchange
6.150% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A	AL PRA	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At August 3, 2022, there were 110,892,097 shares of Air Lease Corporation’s Class A common stock outstanding.

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Air Lease Corporation and Subsidiaries

Form 10-Q

For the Quarterly Period Ended June 30, 2022

TABLE OF CONTENTS

Page

Note About Forward-Looking Statements

PART I—FINANCIAL INFORMATION

Item 1

Financial Statements

Consolidated Balance Sheets—June 30, 2022 and December 31, 2021 (unaudited)

Consolidated Statements of Operations and Other Comprehensive Income/(Loss)—Three and Six Months Ended June 30, 2022 and 2021 (unaudited)

Consolidated Statement of Shareholders’ Equity—Three and Six Months Ended June 30, 2022 and 2021 (unaudited)

Consolidated Statements of Cash Flows—Six Months Ended June 30, 2022 and 2021 (unaudited)

Notes to Consolidated Financial Statements (unaudited)

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3

Quantitative and Qualitative Disclosures About Market Risk

Item 4

Controls and Procedures

PART II—OTHER INFORMATION

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3

Defaults Upon Senior Securities

Item 4

Mine Safety Disclosures

NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q and other publicly available documents may contain or incorporate statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those statements appear in a number of places in this Form 10-Q and include statements regarding, among other matters, the state of the airline industry, including the impact of Russia’s invasion of Ukraine and the impact of sanctions imposed on Russia, our access to the capital markets, the impact of lease deferrals and other accommodations, aircraft delivery delays and other factors affecting our financial condition or results of operations. Words such as “can,” “could,” “may,” “predicts,” “potential,” “will,” “projects,” “continuing,” “ongoing,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and “should,” and variations of these words and similar expressions, are used in many cases to identify these forward-looking statements. Any such forward-looking statements are not guarantees of future performance and involve risks, uncertainties, and other factors that may cause our actual results, performance or achievements, or industry results to vary materially from our future results, performance or achievements, or those of our industry, expressed or implied in such forward-looking statements. Such factors include, among others:

• our inability to obtain additional capital on favorable terms, or at all, to acquire aircraft, service our debt obligations and refinance maturing debt obligations;

• increases in our cost of borrowing or changes in interest rates;

• our inability to generate sufficient returns on our aircraft investments through strategic acquisition and profitable leasing;

• the failure of an aircraft or engine manufacturer to meet its delivery obligations to us, including or as a result of technical or other difficulties with aircraft before or after delivery;

• the extent to which the Russian invasion of Ukraine and the impact of sanctions imposed by the United States, European Union, United Kingdom and others affect our business, including our efforts to pursue insurance claims to recover losses related to aircraft that remain in Russia, the exclusion of Russia, Ukraine and Belarus from the insurance policies that we separately purchase for our owned fleet, and the ability of our lessees to comply with their obligations to maintain insurance policies that cover their operations;

• the extent to which the COVID-19 pandemic impacts our business;

• obsolescence of, or changes in overall demand for, our aircraft;

• changes in the value of, and lease rates for, our aircraft, including as a result of aircraft oversupply, manufacturer production levels, our lessees’ failure to maintain our aircraft, rising inflation, appreciation of the U.S. Dollar, and other factors outside of our control;

• impaired financial condition and liquidity of our lessees, including due to lessee defaults and reorganizations, bankruptcies or similar proceedings;

• increased competition from other aircraft lessors;

• the failure by our lessees to adequately insure our aircraft or fulfill their contractual indemnity obligations to us;

• increased tariffs and other restrictions on trade;

• changes in the regulatory environment, including changes in tax laws and environmental regulations;

• other events affecting our business or the business of our lessees and aircraft manufacturers or their suppliers that are beyond our or their control, such as the threat or realization of epidemic diseases, natural disasters, terrorist attacks, war or armed hostilities between countries or non-state actors; and

• any additional factors discussed under “Part I — Item 1A. Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2021, “Part II — Item 1A. Risk Factors,” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 and other SEC filings, including future SEC filings.

All forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations. You are therefore cautioned not to place undue reliance on such statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not intend and undertake no obligation to update any forward-looking information to reflect actual results or events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

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PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Air Lease Corporation and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and par value amounts)


	June 30, 2022		December 31, 2021
	(unaudited)
Assets
Cash and cash equivalents	$	1,012,779	$	1,086,500
Restricted cash	21,069		21,792
Flight equipment subject to operating leases	27,969,301		27,101,808
Less accumulated depreciation	(4,501,559)		(4,202,804)
	23,467,742		22,899,004
Deposits on flight equipment purchases	1,618,687		1,508,892
Other assets	1,526,180		1,452,534
Total assets	$	27,646,457	$	26,968,722
Liabilities and Shareholders’ Equity
Accrued interest and other payables	$	628,526	$	611,757
Debt financing, net of discounts and issuance costs	18,336,075		17,022,480
Security deposits and maintenance reserves on flight equipment leases	1,186,442		1,173,831
Rentals received in advance	147,127		138,816
Deferred tax liability	908,653		1,013,270
Total liabilities	$	21,206,823	$	19,960,154
Shareholders’ Equity
Preferred Stock, $0.01 par value; 50,000,000 shares authorized; 10,600,000 (aggregate liquidation preference of $850,000) shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	$	106	$	106
Class A common stock, $0.01 par value; 500,000,000 shares authorized; 110,892,097 and 113,987,154 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	1,109		1,140
Class B Non-Voting common stock, $0.01 par value; authorized 10,000,000 shares; no shares issued or outstanding	—		—
Paid-in capital	3,244,282		3,399,245
Retained earnings	3,194,672		3,609,885
Accumulated other comprehensive loss	(535)		(1,808)
Total shareholders’ equity	$	6,439,634	$	7,008,568
Total liabilities and shareholders’ equity	$	27,646,457	$	26,968,722

(See Notes to Consolidated Financial Statements)

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Air Lease Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME/(LOSS)

(In thousands, except share and per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(unaudited)
Revenues
Rental of flight equipment	$	545,271	$	452,044	$	1,111,825	$	920,139
Aircraft sales, trading and other	12,425		39,833		42,533		46,565
Total revenues	557,696		491,877		1,154,358		966,704

Expenses
Interest	118,997		113,598		236,274		231,584
Amortization of debt discounts and issuance costs	13,413		12,513		26,610		24,538
Interest expense	132,410		126,111		262,884		256,122
Depreciation of flight equipment	235,284		217,817		470,591		426,782
Write-off of Russian fleet	—		—		802,352		—
Selling, general and administrative	38,512		26,687		71,277		53,601
Stock-based compensation expense	6,558		6,700		4,035		12,108
Total expenses	412,764		377,315		1,611,139		748,613
Income/(loss) before taxes	144,932		114,562		(456,781)		218,091
Income tax (expense)/benefit	(28,655)		(21,140)		104,065		(40,577)
Net income/(loss)	$	116,277	$	93,422	$	(352,716)	$	177,514
Preferred stock dividends	(10,425)		(7,835)		(20,850)		(11,679)
Net income/(loss) attributable to common stockholders	$	105,852	$	85,587	$	(373,566)	$	165,835

Other comprehensive (loss)/income:
Foreign currency translation adjustment	$	9,349	$	(4,265)	$	6,330	$	(8,072)
Change in fair value of hedged transactions	(9,941)		3,976		(4,712)		6,197
Total tax (expense)/benefit on other comprehensive income/loss	127		62		(346)		401
Other comprehensive (loss)/income, net of tax	(465)		(227)		1,272		(1,474)
Total comprehensive income/(loss) attributable for common stockholders	$	105,387	$	85,360	$	(372,294)	$	164,361

Earnings/(loss) per share of common stock:
Basic	$	0.95	$	0.75	$	(3.32)	$	1.45
Diluted	$	0.95	$	0.75	$	(3.32)	$	1.45
Weighted-average shares outstanding
Basic	110,868,040		114,133,135		112,373,092		114,046,252
Diluted	111,043,836		114,377,965		112,373,092		114,373,576

Dividends declared	$	0.185	$	0.16	$	0.37	$	0.32

(See Notes to Consolidated Financial Statements)

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Air Lease Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share and per share amounts)


	Preferred Stock			Class A Common Stock			Class B Non‑Voting Common Stock							Accumulated Other Comprehensive Income/(Loss)
(unaudited)	Shares	Amount		Shares	Amount		Shares	Amount		Paid‑in Capital		Retained Earnings				Total
Balance at December 31, 2021	10,600,000	$	106	113,987,154	$	1,140	—	$	—	$	3,399,245	$	3,609,885	$	(1,808)	$	7,008,568
Issuance of common stock upon vesting of restricted stock units	—	—		477,656	5		—	—		(3)		—		—		2
Common stock repurchased	—	—		(2,959,458)	(30)		—	—		(129,519)		—		—		(129,549)
Stock-based compensation expense	—	—		—	—		—	—		(2,523)		—		—		(2,523)
Cash dividends (declared $0.185 per share of Class A common stock)	—	—		—	—		—	—		—		(21,136)		—		(21,136)
Cash dividends (declared on preferred stock)	—	—		—	—		—	—		—		(10,425)		—		(10,425)
Change in foreign currency translation adjustment and in fair value of hedged transactions, net of tax	—	—		—	—		—	—		—		—		1,738		1,738
Tax withholdings on stock-based compensation	—	—		(188,093)	(2)		—	—		(8,095)		—		—		(8,097)
Net loss	—	—		—	—		—	—		—		(468,993)		—		(468,993)
Balance at March 31, 2022	10,600,000	$	106	111,317,259	$	1,113	—	$	—	$	3,259,105	$	3,109,331	$	(70)	$	6,369,585
Issuance of common stock upon vesting of restricted stock units	—	—		59,603	—		—	—		—		—		—		—
Common stock repurchased	—	—		(461,416)	(4)		—	—		(20,450)		—		—		(20,454)
Stock-based compensation expense	—	—		—	—		—	—		6,558		—		—		6,558
Cash dividends (declared $0.185 per share of Class A common stock)	—	—		—	—		—	—		—		(20,511)		—		(20,511)
Cash dividends (declared on preferred stock)	—	—		—	—		—	—		—		(10,425)		—		(10,425)
Change in foreign currency translation adjustment and in fair value of hedged transactions, net of tax	—	—		—	—		—	—		—		—		(465)		(465)
Tax withholdings on stock-based compensation	—	—		(23,349)	—		—	—		(931)		—		—		(931)
Net income	—	—		—	—		—	—		—		116,277		—		116,277
Balance at June 30, 2022	10,600,000	$	106	110,892,097	$	1,109	—	$	—	$	3,244,282	$	3,194,672	$	(535)	$	6,439,634

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Air Lease Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share and per share amounts)


	Preferred Stock			Class A Common Stock			Class B Non‑Voting Common Stock							Accumulated Other Comprehensive Income/(Loss)
(unaudited)	Shares	Amount		Shares	Amount		Shares	Amount		Paid‑in Capital		Retained Earnings				Total
Balance at December 31, 2020	10,000,000	$	100	113,852,896	$	1,139	—	$	—	$	2,793,178	$	3,277,599	$	325	$	6,072,341
Issuance of preferred stock	300,000	3		—	—		—	—		295,446		—		—		295,449
Issuance of common stock upon exercise of options and vesting of restricted stock units	—	—		425,232	4		—	—		1,437		—		—		1,441
Stock-based compensation expense	—	—		—	—		—	—		5,408		—		—		5,408
Cash dividends (declared $0.16 per share of Class A common stock)	—	—		—	—		—	—		—		(18,259)		—		(18,259)
Cash dividends (declared on preferred stock)	—	—		—	—		—	—		—		(3,844)		—		(3,844)
Change in foreign currency translation adjustment and in fair value of hedged transactions, net of tax	—	—		—	—		—	—		—		—		(1,247)		(1,247)
Tax withholdings on stock-based compensation	—	—		(157,266)	(2)		—	—		(7,167)		—		—		(7,169)
Net income	—	—		—	—		—	—		—		84,092		—		84,092
Balance at March 31, 2021	10,300,000	$	103	114,120,862	$	1,141	—	$	—	$	3,088,302	$	3,339,588	$	(922)	$	6,428,212
Issuance of preferred stock	—	—		—	—		—	—		(19)		—		—		(19)
Issuance of common stock upon exercise of options and vesting of restricted stock units	—	—		25,956	—		—	—		—		—		—		—
Stock-based compensation expense	—	—		—	—		—	—		6,700		—		—		6,700
Cash dividends (declared $0.16 per share of Class A common stock)	—	—		—	—		—	—		—		(18,263)		—		(18,263)
Cash dividends (declared on preferred stock)	—	—		—	—		—	—		—		(7,835)		—		(7,835)
Change in foreign currency translation adjustment and in fair value of hedged transactions, net of tax	—	—		—	—		—	—		—		—		(227)		(227)
Tax withholdings on stock-based compensation	—	—		(5,715)	—		—	—		(275)		—		—		(275)
Net income	—	—		—	—		—	—		—		93,422		—		93,422
Balance at June 30, 2021	10,300,000	$	103	114,141,103	$	1,141	—	$	—	$	3,094,708	$	3,406,912	$	(1,149)	$	6,501,715

(See Notes to Consolidated Financial Statements)

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Air Lease Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	Six Months Ended June 30,
	2022		2021
	(unaudited)
Operating Activities
Net (loss)/income	$	(352,716)	$	177,514
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
Depreciation of flight equipment	470,591		426,782
Write-off of Russian fleet	802,352		—
Stock-based compensation expense	4,035		12,108
Deferred taxes	(104,963)		38,985
Amortization of discounts and debt issuance costs	26,610		24,538
Amortization of prepaid lease costs	23,355		22,267
Gain on aircraft sales, trading and other activity	(71,753)		(1,245)
Changes in operating assets and liabilities:
Other assets	(147,685)		(96,234)
Accrued interest and other payables	26,590		4,751
Rentals received in advance	12,423		(6,801)
Net cash provided by operating activities	688,839		602,665
Investing Activities
Acquisition of flight equipment under operating lease	(1,569,310)		(1,098,174)
Payments for deposits on flight equipment purchases	(345,643)		(202,938)
Proceeds from aircraft sales, trading and other activity	1,166		2,042
Acquisition of aircraft furnishings, equipment and other assets	(106,655)		(102,303)
Net cash used in investing activities	(2,020,442)		(1,401,373)
Financing Activities
Issuance of common stock upon exercise of options	—		1,439
Cash dividends paid on Class A common stock	(42,223)		(36,475)
Common shares repurchased	(150,000)		—
Net proceeds from preferred stock issuance	—		295,428
Cash dividends paid on preferred stock	(20,850)		(11,679)
Tax withholdings on stock-based compensation	(9,027)		(7,442)
Net change in unsecured revolving facilities	520,000		—
Proceeds from debt financings	1,497,615		2,574,089
Payments in reduction of debt financings	(718,687)		(2,576,841)
Debt issuance costs	(5,613)		(7,937)
Security deposits and maintenance reserve receipts	198,763		67,289
Security deposits and maintenance reserve disbursements	(12,819)		(24,170)
Net cash provided by financing activities	1,257,159		273,701
Net decrease in cash	(74,444)		(525,007)
Cash, cash equivalents and restricted cash at beginning of period	1,108,292		1,757,767
Cash, cash equivalents and restricted cash at end of period	$	1,033,848	$	1,232,760
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest, including capitalized interest of $19,127 and $26,116 at June 30, 2022 and 2021, respectively	$	254,349	$	262,949
Cash paid for income taxes	$	3,557	$	2,491
Supplemental Disclosure of Noncash Activities
Buyer furnished equipment, capitalized interest and deposits on flight equipment purchases applied to acquisition of flight equipment	$	343,794	$	449,486
Cash dividends declared, not yet paid	$	20,511	$	18,263

(See Notes to Consolidated Financial Statements)

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Air Lease Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Company Background and Overview

Air Lease Corporation (the “Company”, “ALC”, “we”, “our” or “us”) is a leading aircraft leasing company that was founded by aircraft leasing industry pioneer, Steven F. Udvar-Házy. The Company is principally engaged in purchasing the most modern, fuel-efficient, new technology commercial jet aircraft directly from aircraft manufacturers, such as The Boeing Company (“Boeing”) and Airbus S.A.S. (“Airbus”). The Company leases these aircraft to airlines throughout the world with the intention to generate attractive returns on equity. As of June 30, 2022, the Company owned 392 aircraft, managed 89 aircraft and had 430 aircraft on order with aircraft manufacturers. In addition to its leasing activities, the Company sells aircraft from its fleet to third parties, including other leasing companies, financial services companies, airlines and other investors. The Company also provides fleet management services to investors and owners of aircraft portfolios for a management fee.

Note 2. Basis of Preparation and Critical Accounting Policies

The Company consolidates financial statements of all entities in which the Company has a controlling financial interest, including the accounts of any Variable Interest Entity in which the Company has a controlling financial interest and for which it is the primary beneficiary. All material intercompany balances are eliminated in consolidation. The accompanying Consolidated Financial Statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

The accompanying unaudited Consolidated Financial Statements include all adjustments, consisting only of normal, recurring adjustments, which are in the opinion of management necessary to present fairly the Company’s financial position, results of operations and cash flows at June 30, 2022, and for all periods presented. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the operating results expected for the year ending December 31, 2022. These financial statements and related notes should be read in conjunction with the Consolidated Financial Statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Reclassifications

Certain reclassifications have been made in the prior year’s consolidated financial statements to conform to the classifications in 2022.

Note 3. Debt Financing

The Company’s consolidated debt as of June 30, 2022 and December 31, 2021 is summarized below:


	June 30, 2022		December 31, 2021
	(in thousands)
Unsecured
Senior notes	$	17,685,728	$	16,892,058
Term financings	190,325		167,000
Revolving credit facility	520,000		—
Total unsecured debt financing	18,396,053		17,059,058
Secured
Term financings	120,226		126,660
Export credit financing	14,973		18,301
Total secured debt financing	135,199		144,961

Total debt financing	18,531,252		17,204,019
Less: Debt discounts and issuance costs	(195,177)		(181,539)
Debt financing, net of discounts and issuance costs	$	18,336,075	$	17,022,480

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Air Lease Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Senior unsecured notes (including Medium-Term Note Program)

As of June 30, 2022, the Company had $17.7 billion in senior unsecured notes outstanding. As of December 31, 2021, the Company had $16.9 billion in senior unsecured notes outstanding.

During the six months ended June 30, 2022, the Company issued $1.5 billion in aggregate principal amount of senior unsecured notes comprised of (i) $750.0 million in aggregate principal amount of 2.20% Medium-Term Notes due 2027, and (ii) $750.0 million in aggregate principal amount of 2.875% Medium-Term Notes due 2032.

Unsecured revolving credit facility

As of June 30, 2022, the Company had $520.0 million outstanding under its unsecured revolving credit facility (the “Revolving Credit Facility”). As of December 31, 2021, the Company did not have any amounts outstanding under its Revolving Credit Facility. Borrowings under the Revolving Credit Facility are used to finance the Company’s working capital needs in the ordinary course of business and for other general corporate purposes.

In April 2022, the Company amended and extended its Revolving Credit Facility through an amendment that, among other things, extended the final maturity date from May 5, 2025 to May 5, 2026, increased the total revolving commitments to approximately $7.0 billion as of May 5, 2022 and replaced LIBOR with Term SOFR as the benchmark interest rate and made certain conforming changes related thereto. As of June 30, 2022, borrowings under the Revolving Credit Facility accrued interest at Adjusted Term SOFR (as defined in the Revolving Credit Facility) plus a margin of 1.05% per year. The Company is required to pay a facility fee of 0.20% per year in respect of total commitments under the Revolving Credit Facility. Interest rate and facility fees are subject to increases or decreases based on declines or improvements in the credit ratings for the Company’s debt.

In June 2022, the Company increased the aggregate facility capacity by an additional $122.5 million and also extended the maturity of $125.0 million in commitments to May 5, 2026. As of August 4, 2022, the Company had total revolving commitments of approximately $7.1 billion. Lenders held revolving commitments totaling approximately $6.7 billion that mature on May 5, 2026, commitments totaling $32.5 million that mature on May 5, 2025 and commitments totaling $375.0 million that mature on May 5, 2023.

Other debt financings

From time to time, the Company enters into other debt financings such as unsecured term financings and secured term financings, including export credit. As of June 30, 2022, the outstanding balance on other debt financings was $325.5 million and the Company had pledged three aircraft as collateral with a net book value of $217.1 million. As of December 31, 2021, the outstanding balance on other debt financings was $312.0 million and the Company had pledged three aircraft as collateral with a net book value of $222.2 million.

Maturities

Maturities of debt outstanding as of June 30, 2022 are as follows:


	(in thousands)
Years ending December 31,
2022	$	1,291,611
2023	2,566,329
2024	2,885,280
2025	2,404,761
2026	3,963,094
Thereafter	5,420,177
Total	$	18,531,252

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Air Lease Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 4. Flight equipment subject to operating lease

The following table summarizes the activities for the Company’s flight equipment subject to operating lease for the six months ended June 30, 2022:


	(in thousands)
Net book value as of December 31, 2021	$	22,899,004
Additions	1,936,337
Depreciation	(470,591)
Transfers to net investments in sales-type leases	(105,991)
Write-off of Russian fleet	(791,017)
Net book value as of June 30, 2022	$	23,467,742

Accumulated depreciation as of June 30, 2022	$	(4,501,559)

Write-off of Russian fleet

In response to the sanctions against certain industry sectors and parties in Russia, in March 2022, the Company terminated all of its leasing activities in Russia, including 24 aircraft in its owned fleet. As of August 4, 2022, 21 aircraft previously included in the Company’s owned fleet remain in Russia. The operators of these aircraft have continued to fly most of the aircraft notwithstanding the termination of leasing activities and the Company’s repeated demands for the return of its assets. While the Company maintains title to the aircraft, the Company has determined that it is unlikely it will regain possession of the aircraft that have not been returned and that remain in Russia. As such, during the three months ended March 31, 2022, the Company recognized a loss from asset write-offs of its interests in owned aircraft that remain in Russia, totaling approximately $791.0 million. The Company did not have any losses from asset write-offs for the three months ended June 30, 2022. The 21 aircraft that remain in Russia were removed from the Company’s owned fleet count as of March 31, 2022. In June 2022, the Company submitted insurance claims to its insurers to recover its losses relating to these aircraft and is vigorously pursuing all available insurance claims. Collection, timing and amounts of any insurance recoveries is uncertain at this time.

Note 5. Commitments and Contingencies

Aircraft Acquisition

As of June 30, 2022, the Company had commitments to purchase 430 aircraft from Boeing and Airbus for delivery through 2028, with an estimated aggregate commitment of $27.6 billion.

The table is subject to change based on Airbus and Boeing delivery delays. As noted below, the Company expects delivery delays for some aircraft in its orderbook. The Company remains in discussions with Boeing and Airbus to determine the extent and duration of delivery delays; however, the Company is not yet able to determine the full impact of these delays.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	Estimated Delivery Years
Aircraft Type	2022	2023	2024	2025	2026	Thereafter	Total
Airbus A220-100/300	4	16	24	20	12	—	76
Airbus A320/321neo(1)	17	23	23	24	35	64	186
Airbus A330-900neo	6	6	4	—	—	—	16
Airbus A350-900/1000	1	3	3	—	—	—	7
Airbus A350F	—	—	—	—	2	5	7
Boeing 737-8/9 MAX	14	31	34	19	16	—	114
Boeing 787-9/10	3	7	8	6	—	—	24
Total(2)	45	86	96	69	65	69	430


(1) The Company’s Airbus A320/321neo aircraft orders include 26 long-range variants and 49 extra long-range variants.
(2) The table above reflects Airbus and Boeing aircraft delivery delays based on contractual documentation.

Pursuant to the Company’s purchase agreements with Boeing and Airbus, the Company agrees to contractual delivery dates for each aircraft ordered. These dates can change for a variety of reasons, however for the last several years, manufacturing delays have significantly impacted the planned purchases of the Company’s aircraft on order with Boeing and Airbus. The Company is currently experiencing delivery delays with both Boeing and Airbus aircraft. However, the most significant delivery delays pertain to the Company’s aircraft orders for Boeing 787 aircraft.

During 2020, Boeing began to experience manufacturing issues on its 787 aircraft, which resulted in significant aircraft delivery delays. Boeing halted 787 deliveries in May 2021 and has not indicated when they will resume. The Company has not received any 787s since the halting of the deliveries by Boeing. It is the Company’s understanding that, in July 2022, the FAA approved Boeing’s plan to inspect and repair 787 aircraft, which will allow deliveries to resume. However, the pace and the timing of deliveries of the aircraft for the remainder of this year and potentially beyond still remains uncertain.

The aircraft purchase commitments discussed above could also be impacted by cancellations. The Company’s purchase agreements with Boeing and Airbus generally provide each of the Company and the manufacturers with cancellation rights for delivery delays starting at one year after the original contractual delivery date, regardless of cause. In addition, the Company’s lease agreements generally provide each of the Company and the lessee with cancellation rights related to certain aircraft delivery delays that typically parallel the cancellation rights in the Company’s purchase agreements.

Commitments for the acquisition of these aircraft, calculated at an estimated aggregate purchase price (including adjustments for anticipated inflation) of approximately $27.6 billion as of June 30, 2022, are as follows:


Years ending December 31,
2022	$	3,082,573
2023	6,057,223
2024	6,223,538
2025	4,186,938
2026	3,641,767
Thereafter	4,433,109
Total	$	27,625,148

The Company has made non-refundable deposits on flight equipment purchases of $1.6 billion and $1.5 billion as of June 30, 2022 and December 31, 2021, respectively. If the Company is unable to satisfy its purchase commitments, the Company may be forced to forfeit its deposits and may also be exposed to breach of contract claims by its lessees as well as the manufacturers.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 6. Rental Income

As of June 30, 2022, minimum future rentals on non-cancellable operating leases of flight equipment in the Company’s owned fleet, which have been delivered as of June 30, 2022 are as follows:


Years ending December 31,
2022 (excluding the six months ended June 30, 2022)	$	1,089,192
2023	2,093,379
2024	1,970,231
2025	1,823,512
2026	1,630,714
Thereafter	6,359,325
Total	$	14,966,353

Note 7. Earnings/(Loss) Per Share

Basic earnings/(loss) per share is computed by dividing net income/(loss) by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock; however, potential common equivalent shares are excluded if the effect of including these shares would be anti-dilutive. The Company’s two classes of common stock, Class A and Class B non-voting, have equal rights to dividends and income, and therefore, basic and diluted earnings per share are the same for each class of common stock. As of June 30, 2022, the Company did not have any Class B non-voting common stock outstanding.

Diluted earnings per share takes into account the potential conversion of stock options, restricted stock units, and warrants using the treasury stock method and convertible notes using the if-converted method. Since the Company was in a loss position for the six months ended June 30, 2022, diluted net loss per share is the same as basic net loss per share for the period as the inclusion of all potential common shares outstanding would have been anti-dilutive. For the six months ended June 30, 2022, the Company excluded 301,279 potentially dilutive securities, whose effect would have been anti-dilutive, from the computation of diluted earnings per share. For the three months ended June 30, 2022, the Company did not exclude any potentially dilutive securities, whose effect would have been anti-dilutive, from the computation of diluted earnings per share. For the three and six months ended June 30, 2021, the Company did not exclude any potentially dilutive securities, whose effect would have been anti-dilutive, from the computation of diluted earnings per share. The Company excluded 978,036 and 1,085,311 shares related to restricted stock units for which the performance metric had yet to be achieved as of June 30, 2022 and 2021, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table sets forth the reconciliation of basic and diluted earnings/(loss) per share:


	Three Months Ended June 30,				Six Months Ended June 30,

	2022		2021		2022		2021
	(in thousands, except share and per share)
Basic earnings/(loss) per share:
Numerator
Net income/(loss)	$	116,277	$	93,422	$	(352,716)	$	177,514
Preferred stock dividends	(10,425)		(7,835)		(20,850)		(11,679)
Net income/(loss) attributable to common stockholders	$	105,852	$	85,587	$	(373,566)	$	165,835
Denominator
Weighted-average shares outstanding	110,868,040		114,133,135		112,373,092		114,046,252
Basic earnings/(loss) per share	$	0.95	$	0.75	$	(3.32)	$	1.45
Diluted earnings/(loss) per share:
Numerator
Net income/(loss)	$	116,277	$	93,422	$	(352,716)	$	177,514
Preferred stock dividends	(10,425)		(7,835)		(20,850)		(11,679)
Net income/(loss) attributable to common stockholders	$	105,852	$	85,587	$	(373,566)	$	165,835
Denominator
Number of shares used in basic computation	110,868,040		114,133,135		112,373,092		114,046,252
Weighted-average effect of dilutive securities	175,796		244,830		—		327,324
Number of shares used in per share computation	111,043,836		114,377,965		112,373,092		114,373,576
Diluted earnings/(loss) per share	$	0.95	$	0.75	$	(3.32)	$	1.45

Note 8. Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring and Non-recurring Basis

The Company has a cross-currency swap related to its Canadian dollar Medium-Term Notes which were issued in December 2019. The fair value of the swap as a foreign currency exchange derivative is categorized as a Level 2 measurement in the fair value hierarchy and is measured on a recurring basis. As of June 30, 2022 and December 31, 2021, the estimated fair value of the foreign currency exchange derivative asset was $9.4 million and $14.1 million, respectively.

Financial Instruments Not Measured at Fair Values

The fair value of debt financing is estimated based on the quoted market prices for the same or similar issues, or on the current rates offered to the Company for debt of the same remaining maturities, which would be categorized as a Level 2 measurement in the fair value hierarchy. The estimated fair value of debt financing as of June 30, 2022 was $17.2 billion compared to a book value of $18.5 billion. The estimated fair value of debt financing as of December 31, 2021 was $17.6 billion compared to a book value of $17.2 billion.

The following financial instruments are not measured at fair value on the Company’s Consolidated Balance Sheets at June 30, 2022, but require disclosure of their fair values: cash and cash equivalents and restricted cash. The estimated fair value of such instruments at June 30, 2022 and December 31, 2021 approximates their carrying value as reported on the Consolidated Balance Sheets. The fair value of all these instruments would be categorized as Level 1 in the fair value hierarchy.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 9. Shareholders’ Equity

The Company was authorized to issue 500,000,000 shares of Class A common stock, $0.01 par value, at June 30, 2022 and December 31, 2021. As of June 30, 2022 and December 31, 2021, the Company had 110,892,097

AIR LEASE CORP [AL] Filings

AIR LEASE CORP [AL-PA] Filings