Air Lease Q1 profit misses estimates on higher interest expenses (updated)

Air Lease

06/05/2024 22:58

(Adds executive comments from analyst call)
       May 6 (Reuters) - Air Lease Corp  AL.N  said it is
wrestling with delivery delays from planemakers Boeing  BA.N 
and Airbus  AIR.PA , after reporting a lower-than-expected
quarterly profit on Monday as it made higher interest payments
on funds borrowed to finance aircraft purchases.
    Air Lease shares were down about 6% at $48.61 in after hours
trading.
    Aircraft lessors are benefitting from higher rental revenues
as airlines hunt for aircraft amid a shortage of commercial jets
due to supply problems, slumping production of Boeing's 737 MAX
and Pratt & Whitney GTF engine snags.
    Even with strong demand, delivery problems are likely to
persist, with the U.S. planemaker wrestling with a crisis
stemming from a January mid-air door panel blowout.
    "These imbalances are very likely to stay with us for at
least three to four years in the future," Steven Udvar-Hazy,
executive chairman of Air Lease Corp., told analysts.
     He said neither Boeing nor rival Airbus  AIR.PA  were able
to deliver many of the new aircraft the company expected to take
in early 2024. The aircraft they did deliver were all late, he
added.
    The company expects around $1.5 billion worth of new
aircraft deliveries for the second quarter.
    California-based Air Lease's interest payments rose 19.8%,
to $181.6 million in the first quarter, as the U.S. Federal
Reserve kept interest rates high in a bid to tame inflation.
    As a result, profit per share was 87 cents, below analysts'
average expectation of 91 cents, according to LSEG data.
    Air Lease's first-quarter revenue rose 4.3% to $663.3
million, but fell short of an expectation of $677.2 million.
    CEO John Plueger said he was not trying to play down a
recent report mentioning possible interest by Brazilian
planemaker Embraer  EMBR3.SA  to produce a narrowbody jet that
could compete with Boeing and Airbus. But any such plane would
take years to certify and bring to market with the manufacturer
facing many of the same supply chain problems, Plueger said.
    "Just trying to put a little reality on it," he told
analysts.
    Embraer has said it is focused on selling its current
portfolio of recently developed products.

 (Reporting by Abhijith Ganapavaram in Bengaluru, Allison
Lampert in Montreal and Juby Babu in Mexico City; Editing by
Pooja Desai and Stephen Coates)
 ((Abhijith.G@thomsonreuters.com | X: https://twitter.com/abhijithg4;
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