FTAI Aviation Launches Strategic Capital Initiative and Announces 2025 Financial Guidance

Rhea-AI Summary

FTAI Aviation has launched a Strategic Capital initiative partnering with institutional investors, focusing on acquiring 737NG and A320ceo aircraft. The initiative targets deploying $3.0+ billion of capital annually. As part of this, FTAI will sell 46 on-lease narrowbody aircraft to the first partnership for $549 million, maintaining an asset-light model.

The company has provided its 2025 financial guidance, projecting Adjusted EBITDA of $1.1-1.15 billion, with $500 million from Aviation Leasing and $600-650 million from Aerospace Products. The guidance assumes 100 modules produced quarterly at Montreal facility, maintained or improved Aerospace margins, and 25-35 V2500 engine MRE transactions for 2025.

Positive

• Strategic initiative enables $3.0+ billion annual capital deployment
• Sale of 46 aircraft for $549 million strengthens asset-light model
• Projected 2025 Adjusted EBITDA of $1.1-1.15 billion
• Aerospace Products segment expected to generate $600-650 million EBITDA
• Planned production of 400 modules annually at Montreal facility

Negative

• None.

Insights

Aviation Finance Expert

The launch of FTAI's Strategic Capital initiative marks a pivotal shift in their business strategy. The $3.0+ billion annual capital deployment target through partnerships demonstrates an aggressive scaling approach while maintaining balance sheet efficiency. The sale of 46 narrowbody aircraft for $549 million to the first partnership is particularly strategic - it allows FTAI to monetize assets while retaining the high-margin MRE business through exclusive engine servicing agreements. The projected $1.1-1.15 billion Adjusted EBITDA guidance for 2025 is robust, with Aerospace Products expected to contribute $600-650 million, showing the company's successful transition toward higher-margin technical services. The focus on 737NG and A320ceo aircraft is shrewd, targeting the sweet spot of mature narrowbody assets with predictable maintenance cycles.

Asset Management Strategist

This asset-light transformation represents a masterful pivot in FTAI's business model. By leveraging third-party capital while retaining the lucrative MRE business, they're effectively becoming an asset manager with guaranteed service revenue streams. The 100 modules per quarter production target at Montreal and 25-35 V2500 engine MRE transactions for 2025 indicates strong operational leverage. The strategic brilliance lies in creating a self-feeding ecosystem where partnership-owned aircraft generate captive MRE business. This model significantly reduces capital intensity while maintaining control over the high-margin technical services segment, potentially leading to higher ROE and multiple expansion.

Market Research Analyst

The timing of this initiative aligns perfectly with market dynamics. The narrowbody aircraft sector, particularly 737NG and A320ceo platforms, represents the backbone of global commercial aviation. The 54.5% EBITDA contribution expected from Aerospace Products ($600-650 million out of $1.1-1.15 billion) showcases FTAI's evolution from a traditional lessor to a high-value aerospace services provider. This transformation could warrant a higher valuation multiple, as aerospace service businesses typically trade at premium multiples compared to pure-play aircraft lessors. The exclusive engine servicing agreements create a reliable, recurring revenue stream that investors typically value more highly than traditional leasing income.

Initiative will Focus on Acquiring On-Lease 737NG and A320ceo Aircraft in Collaboration with Third-Party Institutional Investors

NEW YORK, Dec. 30, 2024 (GLOBE NEWSWIRE) -- FTAI Aviation Ltd. (Nasdaq: FTAI) (the “Company”) announces the launch of a Strategic Capital initiative in collaboration with third-party institutional investors. The first partnership under the initiative will focus on acquiring 737NG and A320ceo aircraft and believes this market opportunity will allow for the deployment of $3.0+ billion of capital annually. The Strategic Capital initiative, and its related partnerships, will allow FTAI to maintain an asset-light business model while the partnerships actively acquire on-lease narrowbody aircraft at scale.

In conjunction with the launch, FTAI has agreed to sell 46 on-lease narrowbody aircraft to the first partnership of the Strategic Capital initiative for an estimated net purchase price of $549 million.

All engines owned by the partnership will be powered exclusively via engine and module exchanges through FTAI’s Maintenance, Repair and Exchange (“MRE”) business.

FTAI also announces its initial financial guidance for fiscal year 2025, reflecting management’s expectations for the Company’s continued growth and operational performance. FTAI expects 2025 Adjusted EBITDA of approximately $1.1 to $1.15 billion from its reportable segments, comprised of approximately $500 million from Aviation Leasing and approximately $600 to $650 million from Aerospace Products. 2025 Adjusted EBITDA guidance reflects the following assumptions: (i) an average of 100 modules per quarter produced at the Company’s Montreal facility in fiscal year 2025, (ii) net Aerospace margins in line with or better than those for fiscal year 2024, and (iii) 25 to 35 V2500 engine MRE transactions for fiscal year 2025.

About FTAI Aviation Ltd.

FTAI owns and maintains commercial jet engines with a focus on CFM56 and V2500 engines. FTAI’s propriety portfolio of products, including the Module Factory and a joint venture to manufacture engine PMA, enables it to provide cost savings and flexibility to our airline, lessor, and maintenance, repair, and operations customer base. Additionally, FTAI owns and leases jet aircraft which often facilitates the acquisition of engines at attractive prices. FTAI invests in aviation assets and aerospace products that generate strong and stable cash flows with the potential for earnings growth and asset appreciation.

Cautionary Note Regarding Forward-Looking Statements

This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, whether $3.0+ billion of capital will be deployed annually, that all engines owned by the partnership will be powered exclusively via engine and module exchanges through FTAI’s MRE business, and statements and assumptions regarding FTAI’s fiscal year 2025 financial guidance. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “target,” “projects,” “contemplates” or the negative version of those words or other comparable words. Any forward-looking statements contained in this communication are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements, including, but not limited to, the risk factors set forth in Item 1A. “Risk Factors” of FTAI’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and FTAI’s Quarterly Reports on Form 10-Q, as updated by annual, quarterly and other reports FTAI files with the SEC.

For further information, please contact:

Alan Andreini
Investor Relations
FTAI Aviation Ltd.
(646) 734-9414
aandreini@fortress.com
IR@ftaiaviation.com

Source: FTAI Aviation Ltd.

FAQ

What is FTAI Aviation's projected Adjusted EBITDA for 2025?

FTAI Aviation projects an Adjusted EBITDA of $1.1 to $1.15 billion for fiscal year 2025, with $500 million from Aviation Leasing and $600-650 million from Aerospace Products.

How many aircraft is FTAI selling under the new Strategic Capital initiative?

FTAI is selling 46 on-lease narrowbody aircraft to the first partnership of the Strategic Capital initiative for an estimated net purchase price of $549 million.

What is the annual capital deployment target for FTAI's Strategic Capital initiative?

The Strategic Capital initiative targets deploying over $3.0 billion of capital annually through partnerships focusing on acquiring 737NG and A320ceo aircraft.

How many V2500 engine MRE transactions does FTAI expect in 2025?

FTAI expects to complete 25 to 35 V2500 engine MRE (Maintenance, Repair and Exchange) transactions for fiscal year 2025.

What is the expected module production at FTAI's Montreal facility in 2025?

FTAI expects to produce an average of 100 modules per quarter (400 annually) at its Montreal facility during fiscal year 2025.