Air Lease Corporation (ALC) has ordered Boeing 50 737 MAX 8 and 9 aircraft, consisting of 32 incremental 737 MAX planes and 18 737 MAX planes resulting from the conversion of three 787 aircraft. The lessor first flagged the order when announcing its fourth quarter and fiscal year 2021 results on Thursday. Deliveries of the aircraft are scheduled to commence in 2024 and continue through 2026.

Air Lease Corporation's new aircraft bill totals US$27.7 billion

The Los Angeles based company said the additional 32 MAX aircraft are pursuant to a memorandum of understanding and are subject to the negotiation of a final purchase price. ALC's adjusted net income before taxes for the 12 months to December 31, 2021, was US$589.7 million. In the previous 12 months, adjusted net income before taxes was $692.0 million.

The Boeing order follows a December Airbus order where ALC agreed to buy 116 aircraft, including 59 A321neos, 25 A220-300s, 20 A321XLRs, seven A350Fs and five A330-900s. All up, the lessor has commitments to purchase 431 aircraft from Boeing and Airbus for delivery through 2028, with an estimated total commitment of $27.7 billion.

"We had a strong fourth quarter and second half of 2021 that benefited from continuing airline industry recovery, as seen in our cash collections, operating metrics, fleet expansion, and record lease placements," said John L. Plueger, Chief Executive Officer and President at ALC."We resumed our aircraft sales program and concluded the largest aircraft order in ALC’s history to support the growing demand we are seeing in the marketplace."

Simple Flying has approached ALC for further information on the latest MAX order, including a breakdown of types. However, we have not received a reply before publication deadline.

Strong demand for MAXs spurs ALC into action

Mr Pleuger also noted demand for the MAX was so strong that if operators don't get in soon with their orders, deliveries won't commence until at least 2028. He said most airlines were moving out of the COVID-19 crisis phase and concentrating on fleet modernization, which will drive demand for planes from leasing companies.

Over 50% of the world's commercial aircraft are now leased. The travel downturn was a salutary lesson for many airlines on the need to build and preserve cash stockpiles. Leasing planes reduces the upfront capital cost for airlines, conserving that cash stockpile while also offering airlines a degree of fleet flexibility. It's a trend that's benefiting aircraft lessors like ALC.

Air Lease Corporation Boeing 737 MAX
Photo: Boeing

Shifting sands start to favor aircraft lessors once again

The shifting sands in the aircraft leasing market are frequently discussed and the number of parked planes highlighted. However, according to ALC, their fleet utilization rate last year was an impressive 99.8%.

"During the year ended December 31, 2021, we purchased and took delivery of 53 aircraft from our new order pipeline and sold three aircraft, ending the period with a total of 382 aircraft in our own aircraft portfolio," the lessor said in its SEC filing on Thursday.

"We have a globally diversified customer base comprised of 118 airlines in 60 countries as of December 31, 2021. As of February 16, 2022, all aircraft in our fleet, except for one aircraft, were subject to lease agreements or letters of intent."

During Thursday's announcement, ALC also confirmed it was considering buying more freighters and converting several Airbus A330neos into freighters.