06-May-2010 4:48 PM

Aircastle drops on underwhelming 1Q2010 result – Suppliers Share Wrap

Analysis

Aircastle shares dropped 11.2% in trading yesterday, as the company reported a minor drop in revenue and net profit over the first quarter of 2010. Other major lessors also fell significantly with uncertain economic news coming from Europe.

Aircastle's revenue declined from USD130 million in 1Q2009 to USD126 million in 1Q2010. Lease revenue was up by USD4.1 million (+3.3%), with Aircastle reporting 98% fleet utilisation. However, the company suffered a USD4.8 million charge from the amortisation of net lease discounts and lease incentives. There was also lower end of lease maintenance revenue of USD1.3 million and higher non-cash lease incentive amortization of USD3.7 million.

Costs dropped by 2.6%, thanks to lower maintenance expenses, due to relatively higher costs incurred in 1Q2009 for repossessed aircraft, and an 8% reduction in interest payments.

EBITDA was USD121.2 million, a 4% improvement. Adjusted net income was USD20.6 million, down USD0.5 on 1Q2009's result. The result reflects the lower overall revenues and higher depreciation expenses, partially offset by the drop in maintenance and other costs.

The company described the result as "strong" and has said it is encouraged by the recovery in financial market conditions, particularly the bond market. As of 31-Mar-2010, Aircastle's portfolio consisted of 129 aircraft with 59 lessees located in 33 countries, with the company seeing emerging economies as driving much of the air transport market's recovery.

Aerocentury shares declined 6.1%, while Babcock & Brown Air shares dropped 5.3%. The largest increase was from Travelsky Technology, up 3.3%.

Selected Aviation suppliers' daily share price movements (% change): 05-May-2010

Aircastle drops on underwhelming 1Q2010 result – Suppliers Share Wrap

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