Willis Lease Finance reports first-quarter pre-tax income of US$6.8 million

Willis Lease Finance has reported first-quarter pre-tax earnings of US$6.8 million and total revenues of US$89.5 million. For the three months ended March 31, 2023, aggregate lease rent and maintenance reserve revenues were US$76.7 million and spare parts and equipment sales were US$5.1 million. The company reported
increased total revenues in the first quarter when compared to the prior-year period, primarily due to an increase in the company’s core lease rent and short-term maintenance revenues.

Lease rent revenue increased by US$15.1 million, or 39.6%, to $53.2 million in the first quarter of 2023, compared to US$38.1 million in the first quarter of 2022. The increase is due to an increase in the number of engines acquired and placed on lease, including an increase in utilization compared to that of the prior period.
Maintenance reserve revenue was US$23.5 million in the first quarter of 2023, an increase of 58.4%, compared to US$14.8 million in the same quarter of 2022. There was no long-term maintenance revenue recognized for the three months ended March 31, 2023, compared to US$8.2 million in the comparable prior period. “Non-reimbursable” maintenance reserve revenue is directly influenced by on-lease engine flight hours and cycles. Engines out on lease with “non-reimbursable” usage fees generated US$23.5 million of short-term maintenance revenues, compared to US$6.6 million in the comparable prior period. As of March 31, 2023 and December
31, 2022, there was US$13.7 million and US$6.3 million, respectively, of deferred in-substance fixed payment use fees included in “Unearned revenue.”
Spare parts and equipment sales decreased to US$5.1 million in the first quarter of 2023, compared to US$6.6 million in the first quarter of 2022.
Loss on sale of leased equipment was US$0.1 million in the first quarter of 2023, reflecting the sale of two engines. Gain on sale of leased equipment was US$2.3 million in the first quarter of 2022, reflecting the sale of five engines and other parts and equipment. In the first quarter of 2023, the company had no impairment on its equipment.

Write-down of equipment was US$21.1 million for the first quarter of 2022, primarily reflecting the impairment of two engines located in Russia due to the Russian military action in Ukraine and were expected to be unrecoverable.

The company generated US$6.8 million of pre-tax income in the first quarter of 2023, compared to a pre-tax loss of $27.7 million in the first quarter of 2022.
The book value of lease assets owned directly or through its joint ventures, inclusive of its notes receivable, maintenance rights and investments in sales-type leases, was US$2,531.8 million at March 31, 2023. As of March 31, 2023, the company also managed 327 engines, aircraft and related equipment on behalf of other parties.
The company maintained US$258.0 million of undrawn revolver capacity on March 31, 2023. (£1.00 = US$1.25 at time of publication).