ALC’s revenues up, profits down

Los Angeles-based aviation leasing specialist Air Lease Corporation (ALC) has reported a 68% drop in profits for the first quarter of the year, due to the costs of settling ongoing litigation, but says prospects for the remainder of 2015 look good.

According to the company’s financial results for the three months ended March 31, 2015, revenues increased 13% to $278 million, compared to $246 million for the same quarter in 2014.

However, profit before tax was down 68% at $30 million, compared with $94 million in the same period of 2014, and net profit dropped to $19.3 million, also down 68%.

ALC took a $72 million hit in settling litigation with American International Group (AIG), and International Lease Finance Corporation (ILFC). The legal battle related to claims by AIG, which took over ILFC, that former ILFC executive Steven Udvar-Hazy had stolen trade secrets and was in breach of fiduciary duty when he left the company to set up ALC.

“ALC delivered consistent fleet and revenue growth in the first quarter of 2015. Global passenger traffic grew at a robust 6.1% for the first three months of the year. Capacity has moved in line with passenger growth, suggesting that the system is well balanced. Demand remains solid for modern technology aircraft, as well as for used aircraft from buyers in the secondary market. We are pleased to have the ongoing litigation behind us,” said Steven Udvar-Hazy, ALC’s chairman and CEO.

ALC currently owns 223 aircraft in its operating lease portfolio, which are leased to a globally diversified customer base of 82 airlines in 47 countries. In the first quarter of 2015 the company took delivery of 10 new and two used aircraft. ALC also added two aircraft to its managed fleet portfolio, ending the quarter with 19 aircraft managed for third parties. The company has entered into definitive agreements with Airbus to purchase 57 additional aircraft.

“Our airline customers are performing well overall and have been aided significantly by the decline in oil prices, which have more than offset currency fluctuations. To date, our overall portfolio lease rate factor remains stable and consistent. Our forward lease placements are generally trending farther out into the future reflecting less near term availability of next generation aircraft,” said John Plueger, ALC’s president and chief operating officer.