Air Lease Corporation Announces $2.0 Billion Commercial Paper Program

Rhea-AI Summary

Air Lease (NYSE: AL) has announced the establishment of a $2.0 billion commercial paper program. Under this program, the company can issue short-term, unsecured commercial paper notes on a revolving basis. The notes will be sold in the U.S. commercial paper market and will rank at least pari passu with AL's other unsecured and unsubordinated debt.

The program allows AL to borrow, repay, and re-borrow funds, with the total outstanding amount not exceeding $2 billion. The proceeds will be used for general corporate purposes, including aircraft purchases and debt repayment. The notes will be issued under Section 4(a)(2) exemption of the Securities Act of 1933 and will not be registered under the Securities Act.

Positive

• Establishes new $2.0 billion financing facility enhancing liquidity
• Flexible borrowing structure allowing multiple draws and repayments
• Diversifies funding sources through commercial paper market access

Negative

• Increases potential debt burden through new borrowing program
• Notes will be unregistered securities with resale restrictions

Insights

Financial Analyst

Air Lease 's new $2.0 billion commercial paper program marks a strategic enhancement to their financing toolkit, potentially yielding significant cost advantages and operational flexibility. Commercial paper essentially functions as a short-term IOU that large corporations issue to finance immediate needs - think of it as a corporate version of a credit card, but typically with much lower interest rates.

The program's structure offers three key advantages:

• Enhanced liquidity management through the ability to quickly access short-term funding
• Potentially lower borrowing costs compared to traditional bank loans or bonds
• Flexibility to match funding with aircraft delivery schedules and lease payments

In the aircraft leasing industry, where a single commercial aircraft can cost $100-300 million, this program provides important financial agility. It could reduce Air Lease's weighted average cost of capital, as commercial paper rates typically run 0.5-1.5% lower than traditional credit facilities.

The timing is particularly strategic given the current aircraft market dynamics. With manufacturers like Boeing and Airbus maintaining substantial order backlogs and airlines increasingly turning to leasing solutions, having readily available capital for aircraft acquisitions is crucial. The program's revolving nature allows Air Lease to optimize its capital structure by matching short-term borrowings with its lease payment cycles.

From a balance sheet perspective, this facility complements Air Lease's existing $7.4 billion in liquidity, strengthening their competitive position in securing favorable aircraft purchase terms and responding quickly to market opportunities. However, investors should note that commercial paper markets can become illiquid during financial stress periods, making backup credit facilities essential.

LOS ANGELES--(BUSINESS WIRE)-- Air Lease Corporation (NYSE: AL) (the “Company”) announced today the establishment of its commercial paper program (the “Program”).

Under the terms of the program, the Company may issue from time to time short-term, unsecured commercial paper notes (the “Notes”) under the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). Amounts available under the Program may be borrowed, repaid and re-borrowed from time to time, with the aggregate face or principal amount of the Notes outstanding under the Program at any time not to exceed $2,000,000,000. The Notes will be sold under customary terms in the United States commercial paper market and will rank at least pari passu with all of the Company’s other unsecured and unsubordinated indebtedness. The Company intends to use the net proceeds of the Notes for general corporate purposes, which may include, among other things, the purchase of commercial aircraft and the repayment of existing indebtedness.

The Notes to be offered under the Program have not been and will not be registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements of the Securities Act and applicable state laws. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the Notes under the Program. This press release is being issued in accordance with Rule 135c under the Securities Act.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the intended use of net proceeds from the issuance of Notes under the Program. Such statements are based on current expectations and projections about the Company’s future results, prospects and opportunities and are not guarantees of future performance. Such statements will not be updated unless required by law. Actual results and performance may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors, including but not limited to, unanticipated cash needs and those risks detailed in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and other SEC filings, including future SEC filings.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250121443733/en/

Investors:

Jason Arnold

Vice President, Investor Relations

Email: investors@airleasecorp.com



Media:

Laura Woeste

Senior Manager, Media and Investor Relations

Email: press@airleasecorp.com



Ashley Arnold

Senior Manager, Media and Investor Relations

Email: press@airleasecorp.com

Source: Air Lease Corporation

FAQ

What is the size of Air Lease 's (AL) new commercial paper program?

Air Lease 's new commercial paper program has a maximum limit of $2.0 billion in aggregate face or principal amount outstanding at any time.

How will Air Lease (AL) use the proceeds from the commercial paper program?

AL intends to use the net proceeds for general corporate purposes, including the purchase of commercial aircraft and the repayment of existing indebtedness.

What type of securities are being issued under AL's new program?

The program will issue short-term, unsecured commercial paper notes that will rank at least pari passu with AL's other unsecured and unsubordinated indebtedness.

Are the commercial paper notes from AL's program registered under the Securities Act?

No, the notes will not be registered under the Securities Act and are being issued under the Section 4(a)(2) exemption from registration.