Air Lease Corporation

Air Lease reported Q2 2025 total revenue of $732 million, up 9.7% year over year, and diluted EPS of $3.33. Rental revenue increased 13.5% year over year, and sales proceeds were $126 million from 4 aircraft versus $530 million from 11 aircraft in the prior period. The company recognized a net benefit of $344 million from Russia fleet insurance settlements in the quarter, or approximately $2.43 per share, boosting book value per share to $65.53. Interest expense rose by about $19 million year over year as composite cost of funds increased 29 bps to 4.28% at quarter-end. For guidance, management still expects about $3 billion to $3.5 billion of full-year order book deliveries, likely toward the upper end, about $600 million of deliveries in Q3, about $1.5 billion of aircraft sales for 2025, and $300 million of sales in Q3, with the balance expected in Q4. Management also expects about $60 million of additional Russia settlement benefit in Q3.

John Plueger struck an upbeat tone, saying the quarter benefited from strong market demand, higher lease rates, and significant insurance recoveries. He emphasized that the order book is 100% placed through 2026, that lease extension activity is very strong, and that supply constraints should keep lease rates and aircraft values firm for years. He also said Air Lease is being disciplined on new aircraft pricing, is focused on shareholder value and a strong balance sheet, and is considering capital returns now that leverage is back near target.

Greg Willis focused on the mechanics of revenue growth, margin trends, and financing. He highlighted 9.7% revenue growth, a 13.5% increase in rental revenue, $126 million of sales proceeds, about $17 million of gains on sales, and a 16% gain-on-sale margin, while noting end-of-lease revenue is likely to stay low for the rest of 2025 because most leases are expected to extend. He also pointed to a 29 bp increase in composite cost of funds to 4.28%, roughly 77% fixed-rate borrowings, SG&A at about 6.8% of revenue, liquidity of $7.9 billion, $31 billion of unencumbered assets, $29 billion of contracted rentals, and debt-to-equity just below the 2.5x target after the Russia settlement benefit.

Analysts pressed management on lease expirations, yield improvement, capital allocation, sale-leaseback opportunities, and Russia litigation. Management said the expected 150 to 200 bps portfolio yield improvement is still valid and that the pace of the $5 billion lower-yielding lease roll-off is tracking as planned, though they did not update the percentage already extended. On capital allocation, management said buybacks look attractive but any deployment must be meaningful while preserving an investment-grade balance sheet. On Russia, they reiterated the $60 million Q3 expectation but said they cannot comment further because litigation in London continues.