Air Lease Corporation (ALC) provided an update on its second-quarter activity. As the aviation sector recovers, the company, a known aircraft lessor, delivered 12 new aircraft from its order book with over 300 jets remaining on order. As the aviation industry recovers in the US and other major markets, airlines are keen to resume taking new aircraft, and leasing jets can be a cost-effective way to induct new aircraft.
ALC’s second-quarter update
For the second quarter of 2021, ALC delivered 12 new aircraft from its order book. This included the following aircraft:
- Two Airbus A320neos
- Three Airbus A321neos
- One Airbus A330-900neo
- One Airbus A350-900
- Two Boeing 737 MAX 8s
- One Boeing 737 MAX 9
- Two Boeing 787-9s
In total, aircraft investments in the quarter hit approximately $1 billion. The majority of that occurred in the second half of the quarter. In terms of the aircraft order book, ALC has 339 new aircraft on order from both Boeing and Airbus set to deliver through 2027. As of June 30th, the ALC fleet was comprised of 354 owned aircraft and 89 managed aircraft.
Major deliveries in the second quarter
Stretching from April 1st through June 30th, the second quarter saw ALC deliver an interesting array of new jets to various customers. For example, the sole Airbus A350 that ALC delivered in the quarter was to Spanish carrier World2Fly.
The sole Boeing 737 MAX 9 went to Aeromexico. The flag carrier of Mexico has three more MAX 9s left to be delivered under commitment with Air Lease Corporation. Aeromexico, which is still undergoing a restructuring under Chapter 11, still needs the new MAX jets to power its future fleet efficiency and expansion goals.
Interestingly, the two Boeing 787-9s that ALC delivered in the second quarter went to the same customer: China Southern Airlines. The largest carrier in China, these jets were the fourth and fifth Boeing 787-9s that ALC has placed with China Southern. This rounds out China Southern and ALC’s lease agreements for five 787-9s.
Two Airbus A321LRs were delivered during the quarter. Kazakh carrier, which is separately dealing with a lawsuit with Embraer, took an A321LR (which is a part of the Airbus A321neo lineup) in April. This was the fifth A321LR to enter Air Astana’s fleet.
The second A321LR went to Air Arabia. The UAE_based low-cost carrier is an all-Airbus carrier. This was the final A321LR delivery for Air Arabia under agreement with ALC, which comprised a total of six A321LRs.
Two MAX 8 deliveries in the quarter went to carriers in two very different geographies. Belarusian carrier Belavia took the first of five new Boeing 737 MAX 8s under commitment with ALC. Separately, Cayman Airlines received its third Boeing 737 MAX 8 under agreement with ALC. Both of those deliveries happened in April.
One of the most famous Airbus A330neo customers is Delta Air Lines. The airline took delivery of one new Airbus A330-900neo under a sale-and-leaseback transaction between Delta and Blackbird Capital II. Blackbird Capital II is a second aircraft leasing joint venture between ALC and Napier Park Global Capital. As a sale-leaseback transaction, this is not one of ALC’s aircraft that it had directly on order from Airbus.
The recovery continues
In the first quarter of 2021, ALC delivered ten new aircraft from its order book, of which only one aircraft was a widebody. In the fourth quarter of 2020, ALC similarly delivered ten new aircraft, though there were two widebody deliveries in that count.
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As vaccinations continue to roll out, travel restrictions are starting to come down, and airlines are starting to come back. One such example of this is that airlines are starting to take delivery of new aircraft again, and many are starting to put those planes into commercial service. One of the hallmarks of the crisis was airlines taking delivery of new aircraft and sending them straight to storage.
While some airlines are taking delivery of aircraft to satisfy contractual obligations, a sizable number of airlines are also taking delivery of new aircraft because they want those planes now. Whether it be to power the recovery or to accelerate the retirement of older, inefficient aircraft, this is a benefit to companies like ALC.
Taking on new aircraft via lease is also one of the best ways airlines can induct new jets without having to fork over the tens or hundreds of millions of dollars it can cost to purchase an aircraft. While it does add regular costs for paying the leasing installments, that can be a better option for airlines in the near term if they do not have the cash to purchase a new aircraft outright. In the future, airlines may also purchase aircraft off of a lease and then own the plane outright.
Are you glad to see ALC’s second-quarter delivery numbers? Let us know in the comments!