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Fly Leasing CEO Discusses Q2 2011 Results - Earnings Call Transcript

Stocks in this article: FLY

We’ve entered into a [inaudible] agreement to acquire 49 modern and fuel-efficient aircraft and the transaction value is approximately $1.4 billion. 40 of the 49 aircraft are Boeing 737 Next Generation, and Airbus A-320 family aircraft.

This transaction will be accreative to GAAP earnings and will generated positive free cash after-debt service. The company don’t have raise any new equity. The transactions will have a particularly positive impact on our EPS.

The aircraft in the new portfolio, our leased 23 airlines in 15 countries, and the lessees include many well-known airlines, including Air France, British Airways, Finnair, [inaudible], Iberia, Qantas, Ryanair, South African Airways, and Virgin Atlantic.

As a result, the credit profile of the portfolio is particularly strong. The acquisition has 19 new high quality credits, to fly lessee based. All air – 49 aircraft are on lease today.

The portfolio comes with approximately $1.24 billion of secured non-recourse debt from five lenders. Much of this debt was put in place prior to the credit crisis, and as a result, is on relatively attractive terms. The weighted average interest rate of the debt is approximately 6%.

Notwithstanding the relatively high leverage, it is important to note that upon closing, there’ll be no material near-term debt maturities that will need to be refinanced. The recent financing package in place, on the portfolio, is relatively long term and it’s major.

Approximately $145 million of the 1.4 billion purchase price, including transaction expenses, will come from FLY’s unrestricted cash. As a result, we do not have to raise any new equity or debt to complete this transaction or to meet near-term lease financing obligation.

We’re aiming to close the transaction in the fourth quarter, after a fleet of lend consents, and other customary closing requirements.

I would now like to describe the rationale behind the transaction, and explain how its completion demonstrates some of FLYs strength. As you can see, we are really excited about it. First the acquisition of this portfolio fulfilled FLYs stated goals of growing it’s fleet strategically. Over the last few years, we’ve deployed capital towards debt and share repurchases, and completed several such transactions that have added significantly to shareholder value.

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