Ireland’s FLY Leasing posted a $29.1 million net loss for 2016, reversed from a $22.8 million net profit in 2015.
The Dublin-based lessor said the loss was primarily driven by a $92 million non-cash impairment charge imposed during the 2016 fourth quarter. Aside from the charge, FLY’s 2016 adjusted net income for the year was $79.3 million, down 40% from $132 million in adjusted net income for 2015.
During the fourth quarter of 2016, FLY wrote down three vintage aircraft to their current market values: two Airbus A340-600s (from 2006) and one A330-200 (from 2001), incurring the $92 million impairment charge. The company said it is also evaluating for impairment the remainder of its fleet on an aircraft-by-aircraft basis.
“In 2016 we continued to transform FLY’s fleet … we sold 27 aircraft, primarily mid-life models, at a premium to book value … and [acquired] 10 aircraft during the year,” FLY Leasing CEO Colm Barrington said. FLY reported a $27.2 million gain on sale of aircraft in 2016.
As of Dec. 31, 2016, FLY’s fleet of 76 aircraft comprised 12 A320s, nine A319s, three A321s, three A330s, two A340s, 38 Boeing 737s, four 787s, two 777s and three 757s. Weighted by net book value, the fleet’s average age was 6.2 years with an average remaining lease term of 6.8 years. FLY said the fleet, as of year-end, was generating annualized rents of approximately $325 million and had a 100% lease utilization factor for the year. At year-end, FLY’s fleet was on lease to 42 customers in 27 countries.
FLY reported total revenues of $345 million in 2016, down 25.4% from $462.4 million in 2015. Full-year expenses totaled $381.4 million (which included $96.1 million in aircraft impairment charges), down 12.2% from 2015. The company reported an operating loss of $36.4 million for the year, reversed from a $28.2 million operating profit in 2015.
“We are encouraged by the resilience of global air traffic and the continued profitability of the airline sector,” Barrington said. “[And] there is a continuing strong market for leased aircraft, evidenced by the fact that our fleet is fully utilized and that we have no aircraft available for lease until the end of the year.”
“We entered 2107 with ample liquidity that provides with the opportunity to grow our portfolio … we set a target of acquiring $750 million of new aircraft in 2017 and have the financial firepower to exceed this level if we find the right opportunities to enhance our portfolio and shareholder value,” Barrington said.
FLY’s total assets as of Dec. 31, 2016 were $3.4 billion, including $2.8 billion in aircraft. Total cash was $612.1 million, of which $518 million was unrestricted.
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