Exhibit
|
Title
|
|
99.1
|
Fly Leasing Limited’s interim report for the three and nine months ended September 30, 2018.
|
|
10.1
|
Omnibus Agreement No. 1 [Fly 2016A Warehouse] dated as of December 15, 2017 among Fly Acquisition III Limited, the Lenders party thereto,
Commonwealth Bank of Australia, New York Branch, as Administrative Agent and Wells Fargo Bank, National Association, as Security Trustee
|
|
10.2
|
Amendment No. 2 [Fly 2016A Warehouse] dated as of September 6, 2018 among Fly Acquisition III Limited, the Lenders party thereto, Commonwealth
Bank of Australia, New York Branch, as Administrative Agent and Wells Fargo Bank, National Association, as Security Trustee
|
Fly Leasing Limited
(Registrant)
|
||
Date: November 9, 2018
|
By:
|
/s/ Colm Barrington
|
Colm Barrington
|
||
Chief Executive Officer and Director
|
Exhibit
|
Title
|
|
Fly Leasing Limited’s interim report for the three and nine months ended September 30, 2018.
|
||
Omnibus Agreement No. 1 [Fly 2016A Warehouse] dated as of December 15, 2017 among Fly Acquisition III Limited, the Lenders party thereto,
Commonwealth Bank of Australia, New York Branch, as Administrative Agent and Wells Fargo Bank, National Association, as Security Trustee
|
||
Amendment No. 2 [Fly 2016A Warehouse] dated as of September 6, 2018 among Fly Acquisition III Limited, the Lenders party thereto, Commonwealth Bank
of Australia, New York Branch, as Administrative Agent and Wells Fargo Bank, National Association, as Security Trustee
|
Page
|
|
PART I FINANCIAL INFORMATION
|
|
Item 1. Financial Statements
|
3
|
Item 2. Management’s Discussion & Analysis of Financial Condition and Results of Operations
|
28
|
Item 3. Quantitative and Qualitative Disclosures About Market Risk
|
37
|
Item 4. Controls and Procedures
|
38
|
PART II OTHER INFORMATION
|
|
Item 1. Legal Proceedings
|
39
|
Item 1A. Risk Factors
|
39
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
39
|
Item 3. Default Upon Senior Securities
|
39
|
Item 4. Mine Safety Disclosures
|
39
|
Item 5. Other Information
|
39
|
Item 6. Exhibits
|
39
|
September 30, 2018
|
December 31, 2017
|
|||||||
Assets
|
||||||||
Cash and cash equivalents
|
$
|
180,078
|
$
|
329,105
|
||||
Restricted cash and cash equivalents
|
88,058
|
127,710
|
||||||
Rent receivables
|
4,425
|
2,059
|
||||||
Investment in unconsolidated subsidiary
|
4,138
|
8,196
|
||||||
Investment in finance lease, net
|
13,108
|
13,946
|
||||||
Flight equipment held for operating lease, net
|
3,450,199
|
2,961,744
|
||||||
Maintenance rights
|
270,638
|
131,299
|
||||||
Deferred tax asset, net
|
9,279
|
9,943
|
||||||
Fair value of derivative assets
|
13,561
|
2,643
|
||||||
Other assets, net
|
203,983
|
8,970
|
||||||
Total assets
|
$
|
4,237,467
|
$
|
3,595,615
|
||||
Liabilities
|
||||||||
Accounts payable and accrued liabilities
|
$
|
34,452
|
$
|
18,305
|
||||
Rentals received in advance
|
19,541
|
14,968
|
||||||
Payable to related parties
|
6,247
|
2,084
|
||||||
Security deposits
|
58,702
|
49,689
|
||||||
Maintenance payment liability
|
292,221
|
244,151
|
||||||
Unsecured borrowings, net
|
617,229
|
615,922
|
||||||
Secured borrowings, net
|
2,409,975
|
2,029,675
|
||||||
Deferred tax liability, net
|
40,828
|
30,112
|
||||||
Fair value of derivative liabilities
|
2,173
|
7,344
|
||||||
Other liabilities
|
73,961
|
39,656
|
||||||
Total liabilities
|
3,555,329
|
3,051,906
|
||||||
Shareholders’ equity
|
||||||||
Common shares, $0.001 par value; 499,999,900 shares authorized; 32,650,019 and 27,983,352 shares issued
and outstanding at September 30, 2018 and December 31, 2017, respectively
|
33
|
28
|
||||||
Manager shares, $0.001 par value; 100 shares authorized, issued and outstanding
|
—
|
—
|
||||||
Additional paid-in capital
|
549,123
|
479,637
|
||||||
Retained earnings
|
123,338
|
68,624
|
||||||
Accumulated other comprehensive income (loss), net
|
9,644
|
(4,580
|
)
|
|||||
Total shareholders’ equity
|
682,138
|
543,709
|
||||||
Total liabilities and shareholders’ equity
|
$
|
4,237,467
|
$
|
3,595,615
|
Three months ended
|
Nine months ended
|
|||||||||||||||
September 30, 2018
|
September 30, 2017
|
September 30, 2018
|
September 30, 2017
|
|||||||||||||
Revenues
|
||||||||||||||||
Operating lease revenue
|
$
|
99,347
|
$
|
85,554
|
$
|
285,747
|
$
|
243,466
|
||||||||
Finance lease revenue
|
167
|
181
|
512
|
554
|
||||||||||||
Equity earnings (loss) from unconsolidated subsidiary
|
136
|
125
|
(110
|
)
|
377
|
|||||||||||
Gain on sale of aircraft
|
2,579
|
—
|
5,524
|
—
|
||||||||||||
Interest and other income
|
2,337
|
359
|
4,321
|
920
|
||||||||||||
Total revenues
|
104,566
|
86,219
|
295,994
|
245,317
|
||||||||||||
Expenses
|
||||||||||||||||
Depreciation
|
36,569
|
34,145
|
104,197
|
99,270
|
||||||||||||
Aircraft impairment
|
—
|
22,000
|
—
|
22,000
|
||||||||||||
Interest expense
|
37,472
|
32,677
|
104,039
|
96,400
|
||||||||||||
Selling, general and administrative
|
7,719
|
6,956
|
22,698
|
23,226
|
||||||||||||
Loss (gain) on derivatives
|
(2,095
|
)
|
(19
|
)
|
(2,615
|
)
|
354
|
|||||||||
Loss on modification and extinguishment of debt
|
560
|
82
|
1,458
|
2,511
|
||||||||||||
Maintenance and other costs
|
323
|
406
|
2,037
|
1,636
|
||||||||||||
Total expenses
|
80,548
|
96,247
|
231,814
|
245,397
|
||||||||||||
Net income (loss) before provision for income taxes
|
24,018
|
(10,028
|
)
|
64,180
|
(80
|
)
|
||||||||||
Provision for income taxes
|
3,278
|
2,476
|
9,466
|
4,492
|
||||||||||||
Net income (loss)
|
$
|
20,740
|
$
|
(12,504
|
)
|
$
|
54,714
|
$
|
(4,572
|
)
|
||||||
Weighted average number of shares:
|
||||||||||||||||
Basic
|
30,302,193
|
29,299,976
|
28,764,793
|
30,958,898
|
||||||||||||
Diluted
|
30,381,248
|
29,299,976
|
28,818,464
|
30,958,898
|
||||||||||||
Earnings per share:
|
||||||||||||||||
Basic and Diluted
|
$
|
0.68
|
$
|
(0.43
|
)
|
$
|
1.90
|
$
|
(0.15
|
)
|
Three months ended
|
Nine months ended
|
|||||||||||||||
September 30,
2018
|
September 30,
2017
|
September 30,
2018
|
September 30,
2017
|
|||||||||||||
Net income (loss)
|
$
|
20,740
|
$
|
(12,504
|
)
|
$
|
54,714
|
$
|
(4,572
|
)
|
||||||
Other comprehensive income, net of tax
|
||||||||||||||||
Change in fair value of derivatives, net of deferred tax
(1)
|
2,624
|
395
|
11,425
|
1,544
|
||||||||||||
Reclassification from other comprehensive loss into earnings due to derivatives that no longer qualified
for hedge accounting treatment, net of deferred tax
(2)
|
1,035
|
334
|
2,799
|
971
|
||||||||||||
Comprehensive income (loss)
|
$
|
24,399
|
$
|
(11,775
|
)
|
$
|
68,938
|
$
|
(2,057
|
)
|
(1) |
The associated deferred tax expense was $0.3 million and $1.5 million for the three and nine months ended September 30, 2018, respectively. The associated deferred tax
expense was $0.1 million and $0.3 million for the three and nine months ended September 30, 2017, respectively.
|
(2) |
The associated deferred tax expense was $84,000 and $0.2 million for each of the three and nine months ended September 30, 2018. The associated deferred tax expense was
$33,000 and $0.1 million for the three and nine months ended September 30, 2017, respectively.
|
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income
(Loss), net
|
Total
Shareholders’
Equity
|
|
|||||||||||||||||||||||||
Manager Shares
|
Common Shares
|
|||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||
Balance December 31, 2017
|
100
|
$
|
—
|
27,983,352
|
$
|
28
|
$
|
479,637
|
$
|
68,624
|
$
|
(4,580
|
)
|
$
|
543,709
|
|||||||||||||||||
Net income
|
—
|
—
|
—
|
—
|
—
|
9,630
|
—
|
9,630
|
||||||||||||||||||||||||
Net change in the fair value of derivatives, net of deferred tax of $0.2 million
(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
1,451
|
1,451
|
||||||||||||||||||||||||
Reclassification from other comprehensive loss into earnings due to derivatives that no longer qualified
for hedge accounting treatment, net of deferred tax of
$59,000
(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
722
|
722
|
||||||||||||||||||||||||
Balance March 31, 2018 (unaudited)
|
100
|
—
|
27,983,352
|
28
|
479,637
|
78,254
|
(2,407
|
)
|
555,512
|
|||||||||||||||||||||||
Net income
|
—
|
—
|
—
|
—
|
—
|
24,344
|
—
|
24,344
|
||||||||||||||||||||||||
Net change in the fair value of derivatives, net of deferred tax of $1.0 million
(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
7,350
|
7,350
|
||||||||||||||||||||||||
Reclassification from other comprehensive loss into earnings due to derivatives that no longer qualified
for hedge accounting treatment, net of deferred tax of $84,000
(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
1,042
|
1,042
|
||||||||||||||||||||||||
Balance June 30, 2018 (unaudited)
|
100
|
—
|
27,983,352
|
28
|
479,637
|
102,598
|
5,985
|
588,248
|
||||||||||||||||||||||||
Shares issued in connection with AirAsia Transactions
(2)
|
—
|
—
|
4,666,667
|
5
|
69,486
|
—
|
—
|
69,491
|
||||||||||||||||||||||||
Net income
|
—
|
—
|
—
|
—
|
—
|
20,740
|
—
|
20,740
|
||||||||||||||||||||||||
Net change in the fair value of derivatives, net of deferred tax of $0.3 million
(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
2,624
|
2,624
|
||||||||||||||||||||||||
Reclassification from other comprehensive loss into earnings due to derivatives that no longer qualified
for hedge accounting treatment, net of deferred tax of $84,000
(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
1,035
|
1,035
|
||||||||||||||||||||||||
Balance September 30, 2018 (unaudited)
|
100
|
$
|
—
|
32,650,019
|
$
|
33
|
$
|
549,123
|
$
|
123,338
|
$
|
9,644
|
$
|
682,138
|
|
(1) |
See Note 9 to Notes to Consolidated Financial Statements.
|
|
(2) |
See Note 11 to Notes to Consolidated Financial Statements.
|
|
|
Additional
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Loss, net
|
Total
Shareholders’
Equity
|
|||||||||||||||||||||||||||
Manager Shares
|
Common Shares
|
|||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||
Balance December 31, 2016
|
100
|
$
|
—
|
32,256,440
|
$
|
32
|
$
|
536,922
|
$
|
66,026
|
$
|
(9,745
|
)
|
$
|
593,235
|
|||||||||||||||||
Shares repurchased
|
—
|
—
|
(99,524
|
)
|
—
|
(1,296
|
)
|
—
|
—
|
(1,296
|
)
|
|||||||||||||||||||||
Net income
|
—
|
—
|
—
|
—
|
—
|
5,052
|
—
|
5,052
|
||||||||||||||||||||||||
Net change in the fair value of derivatives, net of deferred tax of $0.3 million
|
—
|
—
|
—
|
—
|
—
|
—
|
1,605
|
1,605
|
||||||||||||||||||||||||
Reclassification from other comprehensive loss into earnings due to derivatives that no longer qualified
for hedge accounting treatment, net of deferred tax of $28,000
|
—
|
—
|
—
|
—
|
—
|
—
|
313
|
313
|
||||||||||||||||||||||||
Balance March 31, 2017 (unaudited)
|
100
|
—
|
32,156,916
|
32
|
535,626
|
71,078
|
(7,827
|
)
|
598,909
|
|||||||||||||||||||||||
Shares repurchased
|
—
|
—
|
(1,981,947
|
)
|
(2
|
)
|
(25,998
|
)
|
—
|
—
|
(26,000
|
)
|
||||||||||||||||||||
Net income
|
—
|
—
|
—
|
—
|
—
|
2,880
|
—
|
2,880
|
||||||||||||||||||||||||
Net change in the fair value of derivatives, net of deferred tax of $0.1 million
|
—
|
—
|
—
|
—
|
—
|
—
|
(456
|
)
|
(456
|
)
|
||||||||||||||||||||||
Reclassification from other comprehensive loss into earnings due to derivatives that no longer qualified
for hedge accounting treatment, net of deferred tax of $32,000
|
—
|
—
|
—
|
—
|
—
|
—
|
324
|
324
|
||||||||||||||||||||||||
Balance June 30, 2017 (unaudited)
|
100
|
—
|
30,174,969
|
30
|
509,628
|
73,958
|
(7,959
|
)
|
575,657
|
|||||||||||||||||||||||
Shares repurchased
|
—
|
—
|
(1,477,164
|
)
|
(1
|
)
|
(20,181
|
)
|
—
|
—
|
(20,182
|
)
|
||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
(12,504
|
)
|
—
|
(12,504
|
)
|
||||||||||||||||||||||
Net change in the fair value of derivatives, net of deferred tax of $0.1 million
|
—
|
—
|
—
|
—
|
—
|
—
|
395
|
395
|
||||||||||||||||||||||||
Reclassification from other comprehensive loss into earnings due to derivatives that no longer qualified
for hedge accounting treatment, net of deferred tax of $33,000
|
—
|
—
|
—
|
—
|
—
|
—
|
334
|
334
|
||||||||||||||||||||||||
Balance September 30, 2017 (unaudited)
|
100
|
$
|
—
|
28,697,805
|
$
|
29
|
$
|
489,447
|
$
|
61,454
|
$
|
(7,230
|
)
|
$
|
543,700
|
Nine months ended
|
||||||||
September 30, 2018
|
September 30, 2017
|
|||||||
Cash Flows from Operating Activities
|
||||||||
Net income (loss)
|
$
|
54,714
|
$
|
(4,572
|
)
|
|||
Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:
|
||||||||
Equity in (earnings) loss from unconsolidated subsidiary
|
110
|
(377
|
)
|
|||||
Gain on sale of aircraft
|
(5,524
|
)
|
—
|
|||||
Finance lease revenue
|
(512
|
)
|
(554
|
)
|
||||
Depreciation
|
104,197
|
99,270
|
||||||
Aircraft impairment
|
—
|
22,000
|
||||||
Amortization of debt discounts and debt issuance costs
|
6,399
|
6,053
|
||||||
Amortization of other comprehensive income into interest expense
|
3,026
|
—
|
||||||
Amortization of lease incentives
|
7,124
|
5,602
|
||||||
Amortization of lease premiums, discounts and other items
|
389
|
289
|
||||||
Amortization of acquisition fair value adjustments
|
861
|
928
|
||||||
Loss on modification and extinguishment of debt
|
1,458
|
2,511
|
||||||
Unrealized foreign exchange (gain) loss
|
(481
|
)
|
2,004
|
|||||
Provision for deferred income taxes
|
9,637
|
4,457
|
||||||
(Gain) loss on derivatives
|
(4,847
|
)
|
105
|
|||||
Maintenance payment liability recognized into earnings
|
(11,846
|
)
|
—
|
|||||
Distributions from unconsolidated subsidiary
|
2,075
|
—
|
||||||
Cash receipts from maintenance rights
|
3,013
|
—
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Rent receivables
|
(5,665
|
)
|
(2,441
|
)
|
||||
Other assets
|
(3,835
|
)
|
(1,925
|
)
|
||||
Payable to related parties
|
(11,159
|
)
|
(9,061
|
)
|
||||
Accounts payable, accrued liabilities and other liabilities
|
20,161
|
13,757
|
||||||
Net cash flows provided by operating activities
|
169,295
|
138,046
|
||||||
Cash Flows from Investing Activities
|
||||||||
Distributions from unconsolidated subsidiary
|
1,874
|
—
|
||||||
Rent received from finance lease
|
1,350
|
1,430
|
||||||
Purchase of flight equipment
|
(617,370
|
)
|
(383,426
|
)
|
||||
Proceeds from sale of aircraft, net
|
113,829
|
—
|
||||||
Deposit for AirAsia transactions
|
(299,945
|
)
|
—
|
|||||
Payments for aircraft improvement
|
(170
|
)
|
(5,157
|
)
|
||||
Payments for lessor maintenance obligations
|
(8,229
|
)
|
(12,123
|
)
|
||||
Net cash flows used in investing activities
|
(808,661
|
)
|
(399,276
|
)
|
||||
Cash Flows from Financing Activities
|
||||||||
Security deposits received
|
10,907
|
7,196
|
||||||
Security deposits returned
|
(6,224
|
)
|
(3,554
|
)
|
||||
Maintenance payment liability receipts
|
59,611
|
56,439
|
||||||
Maintenance payment liability disbursements
|
(8,902
|
)
|
(13,734
|
)
|
||||
Net swap termination payments
|
1,136
|
—
|
||||||
Debt modification and extinguishment costs
|
436
|
(602
|
)
|
|||||
Debt issuance costs
|
(2,216
|
)
|
(307
|
)
|
||||
Proceeds from secured borrowings
|
705,201
|
184,685
|
||||||
Repayment of secured borrowings
|
(328,595
|
)
|
(140,194
|
)
|
||||
Net proceeds from issuance of shares
|
19,394
|
—
|
||||||
Shares repurchased
|
—
|
(47,010
|
)
|
|||||
Net cash flows provided by financing activities
|
$
|
450,748
|
$
|
42,919
|
Nine months ended
|
||||||||
September 30, 2018
|
September 30, 2017
|
|||||||
Effect of exchange rate changes on unrestricted and restricted cash and cash equivalents
|
$
|
(61
|
)
|
$
|
438
|
|||
Net decrease in unrestricted and restricted cash and cash equivalents
|
(188,679
|
)
|
(217,873
|
)
|
||||
Unrestricted and restricted cash and cash equivalents at beginning of period
|
456,815
|
612,087
|
||||||
Unrestricted and restricted cash and cash equivalents at end of period
|
$
|
268,136
|
$
|
394,214
|
||||
Reconciliation to Consolidated Balance Sheets:
|
||||||||
Cash and cash equivalents
|
$
|
180,078
|
$
|
272,080
|
||||
Restricted cash and cash equivalents
|
88,058
|
122,134
|
||||||
Unrestricted and restricted cash and cash equivalents
|
$
|
268,136
|
$
|
394,214
|
|
· |
The timing and pattern of transfer for the non-lease component and the associated lease component are the same; and
|
|
· |
The stand-alone lease component would be classified as an operating lease if accounted for separately.
|
|
· |
The amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy;
|
|
· |
The policy for timing of transfers between levels; and
|
|
· |
The valuation processes for Level 3 fair value measurements.
|
|
· |
The changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements at the end of the
reporting period; and
|
|
· |
The range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.
|
Nine months ended
|
||||||||
September 30, 2018
|
September 30, 2017
|
|||||||
(Dollars in thousands)
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$
|
81,947
|
$
|
76,549
|
||||
Taxes
|
3,893
|
1,918
|
||||||
Noncash Activities:
|
||||||||
Security deposits applied to rent receivables, maintenance payment liability and rentals received in
advance
|
—
|
1,472
|
||||||
Maintenance payment liability applied to rent receivables, other liabilities and maintenance rights
|
7,574
|
68
|
||||||
Other liabilities applied to maintenance payment liability, security deposits and
rent receivables
|
1,140
|
690
|
||||||
Noncash Investing Activities:
|
||||||||
Aircraft improvement
|
8,257
|
192
|
||||||
Noncash activities in connection with purchase of aircraft:
|
||||||||
Deposit for AirAsia transactions
|
195,588
|
—
|
||||||
Maintenance rights
|
(152,929
|
)
|
(15,086
|
)
|
||||
Other
|
32,979
|
25,888
|
||||||
Noncash activities in connection with sale of aircraft
|
2,693
|
—
|
September 30, 2018
|
December 31, 2017
|
|||||||
Total minimum lease payments receivable
|
$
|
11,850
|
$
|
13,200
|
||||
Estimated unguaranteed residual value of leased asset
|
4,227
|
4,227
|
||||||
Unearned finance income
|
(2,969
|
)
|
(3,481
|
)
|
||||
Net Investment in Finance Lease
|
$
|
13,108
|
$
|
13,946
|
September 30, 2018
|
||||
Flight equipment held for operating lease, net
|
$
|
647,342
|
||
Maintenance rights
|
152,930
|
|||
Other assets, net (Portfolio B orderbook value)
|
87,884
|
|||
Security deposits
|
11,817
|
|||
Maintenance payment liability
|
16,716
|
|||
Other liabilities (lease discounts)
|
24,844
|
September 30, 2018
|
December 31, 2017
|
|||||||
Cost
|
$
|
4,133,852
|
$
|
3,574,202
|
||||
Accumulated depreciation
|
(683,653
|
)
|
(612,458
|
)
|
||||
Flight equipment held for operating lease, net
|
$
|
3,450,199
|
$
|
2,961,744
|
September 30, 2018
|
December 31, 2017
|
|||||||||||||||
Europe:
|
||||||||||||||||
United Kingdom
|
$
|
172,898
|
5
|
%
|
$
|
128,116
|
4
|
%
|
||||||||
Spain
|
170,313
|
5
|
%
|
175,593
|
6
|
%
|
||||||||||
Turkey
|
95,646
|
3
|
%
|
135,764
|
5
|
%
|
||||||||||
Other
|
241,007
|
7
|
%
|
251,345
|
8
|
%
|
||||||||||
Europe — Total
|
679,864
|
20
|
%
|
690,818
|
23
|
%
|
||||||||||
Asia and South Pacific:
|
||||||||||||||||
India
|
628,368
|
18
|
%
|
601,072
|
20
|
%
|
||||||||||
Malaysia
|
425,109
|
12
|
%
|
76,706
|
3
|
%
|
||||||||||
Philippines
|
313,522
|
9
|
%
|
268,504
|
9
|
%
|
||||||||||
Indonesia
|
348,334
|
10
|
%
|
204,840
|
7
|
%
|
||||||||||
China
|
179,583
|
5
|
%
|
186,083
|
6
|
%
|
||||||||||
Thailand
|
156,319
|
5
|
%
|
37,953
|
1
|
%
|
||||||||||
Other
|
36,140
|
2
|
%
|
37,712
|
1
|
%
|
||||||||||
Asia and South Pacific — Total
|
2,087,375
|
61
|
%
|
1,412,870
|
47
|
%
|
||||||||||
Mexico, South and Central America — Total
|
76,042
|
2
|
%
|
162,274
|
6
|
%
|
||||||||||
North America:
|
||||||||||||||||
United States
|
128,530
|
4
|
%
|
147,580
|
5
|
%
|
||||||||||
Other
|
50,041
|
1
|
%
|
52,182
|
2
|
%
|
||||||||||
North America — Total
|
178,571
|
5
|
%
|
199,762
|
7
|
%
|
||||||||||
Middle East and Africa:
|
||||||||||||||||
Ethiopia
|
315,477
|
9
|
%
|
322,896
|
11
|
%
|
||||||||||
Other
|
112,870
|
3
|
%
|
116,273
|
4
|
%
|
||||||||||
Middle East and Africa — Total
|
428,347
|
12
|
%
|
439,169
|
15
|
%
|
||||||||||
Off-Lease — Total
|
—
|
—
|
56,851
|
2
|
%
|
|||||||||||
Total flight equipment held for operating lease, net
|
$
|
3,450,199
|
100
|
%
|
$
|
2,961,744
|
100
|
%
|
Three months ended
|
||||||||||||||||
September 30, 2018
|
September 30, 2017
|
|||||||||||||||
Europe:
|
||||||||||||||||
United Kingdom
|
$
|
8,098
|
8
|
%
|
$
|
7,500
|
9
|
%
|
||||||||
Spain
|
4,344
|
4
|
%
|
4,062
|
5
|
%
|
||||||||||
Turkey
|
2,312
|
2
|
%
|
4,232
|
5
|
%
|
||||||||||
Other
|
8,125
|
9
|
%
|
9,919
|
11
|
%
|
||||||||||
Europe — Total
|
22,879
|
23
|
%
|
25,713
|
30
|
%
|
||||||||||
Asia and South Pacific:
|
||||||||||||||||
India
|
18,549
|
19
|
%
|
16,704
|
20
|
%
|
||||||||||
Malaysia
|
6,975
|
7
|
%
|
2,047
|
2
|
%
|
||||||||||
Philippines
|
9,589
|
10
|
%
|
7,480
|
9
|
%
|
||||||||||
Indonesia
|
7,433
|
7
|
%
|
5,222
|
6
|
%
|
||||||||||
China
|
5,652
|
6
|
%
|
5,653
|
7
|
%
|
||||||||||
Thailand
|
5,301
|
5
|
%
|
961
|
1
|
%
|
||||||||||
Other
|
668
|
1
|
%
|
1,732
|
2
|
%
|
||||||||||
Asia and South Pacific — Total
|
54,167
|
55
|
%
|
39,799
|
47
|
%
|
||||||||||
Mexico, South and Central America — Total
|
2,157
|
2
|
%
|
4,391
|
5
|
%
|
||||||||||
North America:
|
||||||||||||||||
United States
|
7,266
|
7
|
%
|
4,410
|
5
|
%
|
||||||||||
Other
|
1,559
|
2
|
%
|
1,560
|
2
|
%
|
||||||||||
North America — Total
|
8,825
|
9
|
%
|
5,970
|
7
|
%
|
||||||||||
Middle East and Africa:
|
||||||||||||||||
Ethiopia
|
7,504
|
8
|
%
|
7,505
|
9
|
%
|
||||||||||
Other
|
3,815
|
3
|
%
|
2,176
|
2
|
%
|
||||||||||
Middle East and Africa — Total
|
11,319
|
11
|
%
|
9,681
|
11
|
%
|
||||||||||
Total Operating Lease Revenue
|
$
|
99,347
|
100
|
%
|
$
|
85,554
|
100
|
%
|
Nine months ended
|
||||||||||||||||
September 30, 2018
|
September 30, 2017
|
|||||||||||||||
Europe:
|
||||||||||||||||
United Kingdom
|
$
|
23,222
|
8
|
%
|
$
|
22,611
|
9
|
%
|
||||||||
Spain
|
12,922
|
5
|
%
|
7,097
|
3
|
%
|
||||||||||
Turkey
|
8,849
|
3
|
%
|
12,845
|
5
|
%
|
||||||||||
Other
|
23,741
|
8
|
%
|
29,641
|
13
|
%
|
||||||||||
Europe — Total
|
68,734
|
24
|
%
|
72,194
|
30
|
%
|
||||||||||
Asia and South Pacific:
|
||||||||||||||||
India
|
66,353
|
23
|
%
|
47,475
|
20
|
%
|
||||||||||
Malaysia
|
13,128
|
5
|
%
|
5,887
|
2
|
%
|
||||||||||
Philippines
|
24,973
|
8
|
%
|
22,304
|
9
|
%
|
||||||||||
Indonesia
|
21,598
|
8
|
%
|
10,294
|
4
|
%
|
||||||||||
China
|
16,958
|
6
|
%
|
16,958
|
7
|
%
|
||||||||||
Thailand
|
7,224
|
3
|
%
|
2,885
|
1
|
%
|
||||||||||
Other
|
2,759
|
1
|
%
|
5,328
|
3
|
%
|
||||||||||
Asia and South Pacific — Total
|
152,993
|
54
|
%
|
111,131
|
46
|
%
|
||||||||||
Mexico, South and Central America — Total
|
9,325
|
3
|
%
|
13,174
|
5
|
%
|
||||||||||
North America:
|
||||||||||||||||
United States
|
16,075
|
6
|
%
|
13,246
|
5
|
%
|
||||||||||
Other
|
4,682
|
1
|
%
|
4,677
|
2
|
%
|
||||||||||
North America — Total
|
20,757
|
7
|
%
|
17,923
|
7
|
%
|
||||||||||
Middle East and Africa:
|
||||||||||||||||
Ethiopia
|
22,514
|
8
|
%
|
22,514
|
9
|
%
|
||||||||||
Other
|
11,424
|
4
|
%
|
6,530
|
3
|
%
|
||||||||||
Middle East and Africa — Total
|
33,938
|
12
|
%
|
29,044
|
12
|
%
|
||||||||||
Total Operating Lease Revenue
|
$
|
285,747
|
100
|
%
|
$
|
243,466
|
100
|
%
|
Three months ended
|
Nine months ended
|
|||||||||||||||
September 30,
2018
|
September 30,
2017
|
September 30,
2018
|
September 30,
2017
|
|||||||||||||
End of lease income
|
$
|
3,072
|
$
|
—
|
$
|
16,069
|
$
|
1,239
|
||||||||
Amortization of lease incentives
|
(2,480
|
)
|
(1,956
|
)
|
(7,124
|
)
|
(5,602
|
)
|
Nine months ended
|
||||||||
September 30, 2018
|
September 30, 2017
|
|||||||
Maintenance rights, net beginning balance
|
$
|
131,299
|
$
|
101,969
|
||||
Acquisitions
|
152,930
|
15,086
|
||||||
Capitalized to aircraft improvements
|
(8,209
|
)
|
(192
|
)
|
||||
Maintenance rights settled with retained maintenance payments
|
(2,369
|
)
|
—
|
|||||
Cash receipts from maintenance rights
|
(3,013
|
)
|
—
|
|||||
Maintenance rights, net ending balance
|
$
|
270,638
|
$
|
116,863
|
Balance as of
|
||||||||
September 30, 2018
|
December 31, 2017
|
|||||||
(dollars in thousands)
|
||||||||
Outstanding principal balance:
|
||||||||
2021 Notes
|
$
|
325,000
|
$
|
325,000
|
||||
2024 Notes
|
300,000
|
300,000
|
||||||
Total outstanding principal balance
|
625,000
|
625,000
|
||||||
Unamortized debt discounts and loan costs
|
(7,771
|
)
|
(9,078
|
)
|
||||
Unsecured borrowings, net
|
$
|
617,229
|
$
|
615,922
|
Outstanding principal balance
as of
|
Weighted average interest rate
(1)
as of
|
||||||||||||||||||
September 30,
2018
(2)
|
December 31,
2017
(2)
|
September 30,
2018
|
December 31,
2017
|
Maturity date
|
|||||||||||||||
Securitization Notes
|
$
|
94,319
|
$
|
101,551
|
2.97
|
%
|
3.06
|
%
|
November 2033
|
||||||||||
Nord LB Facility
|
117,332
|
153,176
|
4.97
|
%
|
4.47
|
%
|
November 2018
|
||||||||||||
CBA Facility
|
—
|
49,080
|
—
|
5.53
|
%
|
N/A
|
|||||||||||||
Term Loan
|
413,369
|
431,271
|
5.15
|
%
|
4.25
|
%
|
February 2023
|
||||||||||||
Magellan Acquisition Limited Facility
|
311,861
|
331,768
|
4.15
|
%
|
3.15
|
%
|
December 2025
|
||||||||||||
Fly Acquisition III Facility
|
128,713
|
86,520
|
3.69
|
%
|
3.41
|
%
|
February 2022
|
||||||||||||
Fly Aladdin Acquisition Facility
|
548,112
|
—
|
4.06
|
%
|
—
|
June 2020 / June 2023
|
|||||||||||||
Other Aircraft Secured Borrowings
|
835,804
|
905,525
|
4.30
|
%
|
3.83
|
%
|
September 2019 - June 2028
|
||||||||||||
Unamortized debt discounts and loan costs
|
(39,535
|
)
|
(29,216
|
)
|
|||||||||||||||
Total secured borrowings, net
|
$
|
2,409,975
|
$
|
2,029,675
|
4.32
|
%
|
3.84
|
%
|
(1) |
Represents the contractual interest rates and effect of derivative instruments and excludes the amortization of debt discounts and debt
issuance costs.
|
(2) |
As of September 30, 2018 and December 31, 2017, accrued interest on secured borrowings totaled $8.9 million and $6.6 million, respectively.
|
Type
|
Quantity
|
Maturity Date
|
Hedge
Interest Rate
|
Swap Contract
Notional
Amount
|
Credit Risk
Adjusted
Fair Value
|
Gain Recognized
in Accumulated
Comprehensive
Loss
|
Ineffectiveness
Gain Recognized
into Earnings
|
||||||||||||||||||
Interest rate swap contracts
|
25
|
11/14/18-12/8/25
|
0.99%-4.30
|
%
|
$
|
668,202
|
$
|
12,340
|
$
|
10,910
|
$
|
20
|
|||||||||||||
Accrued interest
|
—
|
(87
|
)
|
—
|
—
|
||||||||||||||||||||
Sub-total
|
25
|
$
|
668,202
|
$
|
12,253
|
$
|
10,910
|
$
|
20
|
Type
|
Quantity
|
Maturity Date
|
Contracted
Fixed
Conversion
Rate to U.S.
Dollar
|
Total
Contracted
USD to be
Received
|
Credit Risk
Adjusted
Fair Value
|
Gain Recognized
in Accumulated
Comprehensive
Loss
|
Ineffectiveness
Gain Recognized
into Earnings
|
|||||||||||||||
Cross currency swap contract
|
1
|
11/26/25
|
1 EURO to $1.3068
|
$
|
70,970
|
$
|
1,219
|
$
|
1,067
|
$
|
—
|
|||||||||||
Accrued rent
|
—
|
15
|
—
|
—
|
||||||||||||||||||
Sub-total
|
1
|
$
|
70,970
|
$
|
1,234
|
$
|
1,067
|
$
|
—
|
|||||||||||||
Total - designated derivative assets
|
26
|
$
|
13,487
|
$
|
11,977
|
$
|
20
|
Type
|
Quantity
|
Maturity Date
|
Hedge
Interest Rate
|
Swap Contract
Notional
Amount
|
Credit Risk
Adjusted
Fair Value
|
Loss Recognized
in Accumulated
Comprehensive
Loss
|
Ineffectiveness
Gain Recognized
into Earnings
|
||||||||||||||||||
Interest rate swap contracts
|
11
|
6/15/23
|
2.95%-3.13
|
%
|
$
|
44,879
|
$
|
(716
|
)
|
$
|
(539
|
)
|
$
|
3
|
|||||||||||
Accrued interest
|
—
|
(52
|
)
|
—
|
—
|
||||||||||||||||||||
Total – designated derivative liabilities
|
11
|
$
|
44,879
|
$
|
(768
|
)
|
$
|
(539
|
)
|
$
|
3
|
Type
|
Quantity
|
Maturity Date
|
Hedge Interest
Rate
|
Swap Contract
Notional
Amount
|
Credit Risk
Adjusted
Fair Value
|
Ineffectiveness
Gain Recognized
into Earnings
|
|||||||||||||||
Interest rate swap contracts
|
3
|
11/1/18
|
2.87%-2.88
|
%
|
$
|
—
|
$
|
74
|
$
|
74
|
|||||||||||
Accrued interest
|
—
|
—
|
—
|
||||||||||||||||||
Total – dedesignated and undesignated derivative assets
|
3
|
$
|
—
|
$
|
74
|
$
|
74
|
Type
|
Quantity
|
Maturity Date
|
Hedge Interest
Rate
|
Swap Contract
Notional
Amount
|
Credit Risk
Adjusted
Fair Value
|
Ineffectiveness
Gain Recognized
into Earnings
|
|||||||||||||||
Interest rate swap contract
|
1
|
2/9/19
|
3.47
|
%
|
$
|
267,422
|
$
|
(963
|
)
|
$
|
859
|
||||||||||
Accrued interest
|
—
|
(442
|
)
|
—
|
|||||||||||||||||
Total – dedesignated and undesignated derivative liability
|
1
|
$
|
267,422
|
$
|
(1,405
|
)
|
$
|
859
|
Three months ended
|
Nine months ended
|
|||||||||||||||
September 30,
2018
|
September 30,
2017
|
September 30,
2018
|
September 30,
2017
|
|||||||||||||
Numerator
|
||||||||||||||||
Net income (loss) attributable to common shareholders
|
$
|
20,740
|
$
|
(12,504
|
)
|
$
|
54,714
|
$
|
(4,572
|
)
|
||||||
Denominator
|
||||||||||||||||
Weighted average shares outstanding-Basic
|
30,302,193
|
29,299,976
|
28,764,793
|
30,958,898
|
||||||||||||
Dilutive common equivalent shares:
|
||||||||||||||||
SARs
|
79,055
|
—
|
53,671
|
—
|
||||||||||||
Weighted average shares outstanding-Diluted
|
30,381,248
|
29,299,976
|
28,818,464
|
30,958,898
|
||||||||||||
Earnings per share:
|
||||||||||||||||
Basic
|
||||||||||||||||
Distributed earnings
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||
Undistributed income (loss)
|
$
|
0.68
|
$
|
(0.43
|
)
|
$
|
1.90
|
$
|
(0.15
|
)
|
||||||
Basic earnings (loss) per share
|
$
|
0.68
|
$
|
(0.43
|
)
|
$
|
1.90
|
$
|
(0.15
|
)
|
||||||
Diluted
|
||||||||||||||||
Distributed earnings
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||
Undistributed income (loss)
|
$
|
0.68
|
$
|
(0.43
|
)
|
$
|
1.90
|
$
|
(0.15
|
)
|
||||||
Diluted earnings (loss) per share
|
$
|
0.68
|
$
|
(0.43
|
)
|
$
|
1.90
|
$
|
(0.15
|
)
|
As of September 30, 2018
|
As of December 31, 2017
|
|||||||||||||||
Principal
Amount
Outstanding
|
Fair Value
|
Principal
Amount
Outstanding
|
Fair Value
|
|||||||||||||
Securitization Notes
|
$
|
94,319
|
$
|
89,014
|
$
|
101,551
|
$
|
95,839
|
||||||||
2021 Notes
|
325,000
|
335,173
|
325,000
|
339,235
|
||||||||||||
2024 Notes
|
300,000
|
288,750
|
300,000
|
301,500
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
September 30, 2018:
|
||||||||||||||||
Derivative assets
|
—
|
$
|
13,561
|
—
|
$
|
13,561
|
||||||||||
Derivative liabilities
|
—
|
2,173
|
—
|
2,173
|
||||||||||||
December 31, 2017:
|
||||||||||||||||
Derivative assets
|
—
|
$
|
2,643
|
—
|
$
|
2,643
|
||||||||||
Derivative liabilities
|
—
|
7,344
|
—
|
7,344
|
Three months ended
|
||||||||
September 30, 2018
|
September 30, 2017
|
|||||||
(Dollars in thousands)
|
||||||||
Revenues
|
||||||||
Operating lease revenue
|
$
|
99,347
|
$
|
85,554
|
||||
Finance lease revenue
|
167
|
181
|
||||||
Equity earnings from unconsolidated subsidiary
|
136
|
125
|
||||||
Gain on sale of aircraft
|
2,579
|
—
|
||||||
Interest and other income
|
2,337
|
359
|
||||||
Total revenues
|
104,566
|
86,219
|
||||||
Expenses
|
||||||||
Depreciation
|
36,569
|
34,145
|
||||||
Aircraft impairment
|
—
|
22,000
|
||||||
Interest expense
|
37,472
|
32,677
|
||||||
Selling, general and administrative
|
7,719
|
6,956
|
||||||
(Gain) on derivatives
|
(2,095
|
)
|
(19
|
)
|
||||
Loss on modification and extinguishment of debt
|
560
|
82
|
||||||
Maintenance and other costs
|
323
|
406
|
||||||
Total expenses
|
80,548
|
96,247
|
||||||
Net income (loss) before provision for income taxes
|
24,018
|
(10,028
|
)
|
|||||
Provision for income taxes
|
3,278
|
2,476
|
||||||
Net income (loss)
|
$
|
20,740
|
$
|
(12,504
|
)
|
Three months ended
|
|
Increase/
(Decrease)
|
||||||||||
September 30, 2018
|
September 30, 2017
|
|||||||||||
(Dollars in thousands)
|
||||||||||||
Operating lease revenue:
|
||||||||||||
Operating lease rental revenue
|
$
|
98,863
|
$
|
87,616
|
$
|
11,247
|
||||||
End of lease income
|
3,072
|
—
|
3,072
|
|||||||||
Amortization of lease incentives
|
(2,480
|
)
|
(1,956
|
)
|
(524
|
)
|
||||||
Amortization of lease premiums, discounts & other
|
(108
|
)
|
(106
|
)
|
(2
|
)
|
||||||
Total operating lease revenue
|
$
|
99,347
|
$
|
85,554
|
$
|
13,793
|
Nine months ended
|
||||||||
September 30, 2018
|
September 30, 2017
|
|||||||
(Dollars in thousands)
|
||||||||
Revenues
|
||||||||
Operating lease revenue
|
$
|
285,747
|
$
|
243,466
|
||||
Finance lease revenue
|
512
|
554
|
||||||
Equity (loss) earnings from unconsolidated subsidiary
|
(110
|
)
|
377
|
|||||
Gain on sale of aircraft
|
5,524
|
—
|
||||||
Interest and other income
|
4,321
|
920
|
||||||
Total revenues
|
295,994
|
245,317
|
||||||
Expenses
|
||||||||
Depreciation
|
104,197
|
99,270
|
||||||
Aircraft impairment
|
—
|
22,000
|
||||||
Interest expense
|
104,039
|
96,400
|
||||||
Selling, general and administrative
|
22,698
|
23,226
|
||||||
(Gain) loss on derivatives
|
(2,615
|
)
|
354
|
|||||
Loss on modification and extinguishment of debt
|
1,458
|
2,511
|
||||||
Maintenance and other costs
|
2,037
|
1,636
|
||||||
Total expenses
|
231,814
|
245,397
|
||||||
Net income (loss) before provision for income taxes
|
64,180
|
(80
|
)
|
|||||
Provision for income taxes
|
9,466
|
4,492
|
||||||
Net income (loss)
|
$
|
54,714
|
$
|
(4,572
|
)
|
Nine months ended
|
Increase/
(Decrease)
|
|||||||||||
September 30, 2018
|
September 30, 2017
|
|||||||||||
(Dollars in thousands)
|
||||||||||||
Operating lease revenue:
|
||||||||||||
Operating lease rental revenue
|
$
|
277,191
|
$
|
248,118
|
$
|
29,073
|
||||||
End of lease income
|
16,069
|
1,239
|
14,830
|
|||||||||
Amortization of lease incentives
|
(7,124
|
)
|
(5,602
|
)
|
(1,522
|
)
|
||||||
Amortization of lease premiums, discounts & other
|
(389
|
)
|
(289
|
)
|
(100
|
)
|
||||||
Total operating lease revenue
|
$
|
285,747
|
$
|
243,466
|
$
|
42,281
|
Item 5. |
Other Information
|
Item 6. |
Exhibits
|
Exhibit
|
Title
|
|
10.1
|
Omnibus Agreement No. 1 [Fly 2016A Warehouse] dated as of December 15, 2017 among Fly Acquisition III Limited, the Lenders party thereto,
Commonwealth Bank of Australia, New York Branch, as Administrative Agent and Wells Fargo Bank, National Association, as Security Trustee
|
|
10.2
|
Amendment No. 2 [Fly 2016A Warehouse] dated as of September 6, 2018 among Fly Acquisition III Limited, the Lenders party thereto, Commonwealth
Bank of Australia, New York Branch, as Administrative Agent and Wells Fargo Bank, National Association, as Security Trustee
|
FLY ACQUISITION III LIMITED
, as Borrower
|
By
|
Name:
|
|
Title:
|
WELLS FARGO BANK, NATIONAL ASSOCIATION
, as Security Trustee
|
By
|
Name:
|
|
Title:
|
COMMONWEALTH BANK OF AUSTRALIA, NEW YORK BRANCH
, as
Administrative Agent
|
By
|
Name:
|
|
Title:
|
LENDERS
|
COMMONWEALTH BANK OF AUSTRALIA, NEW YORK BRANCH
, as a
Lender
|
By
|
Name:
|
|
Title:
|
THE BANK OF TOKYO-MITSUBISHI UFJ LTD.
, as a Lender
|
By
|
Name:
|
|
Title:
|
|
NEW YORK LIFE INSURANCE COMPANY
, as a Lender
|
By
|
Name:
|
|
Title:
|
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
, as a
Lender
|
By
|
|||
Name:
|
|||
Title:
|
NATIONAL AUSTRALIA BANK LIMITED
, as a Lender
|
By
|
|||
Name:
|
|||
Title:
|
By
|
|||
Name:
|
|||
Title:
|
FLY ACQUISITION III LIMITED
, as Borrower
|
By
|
Name:
|
|
Title:
|
WELLS FARGO BANK, NATIONAL ASSOCIATION
, as Security Trustee
|
By
|
Name:
|
|
Title:
|
COMMONWEALTH BANK OF AUSTRALIA, NEW YORK BRANCH
, as
Administrative Agent
|
By
|
Name:
|
|
Title:
|
LENDERS
|
COMMONWEALTH BANK OF AUSTRALIA, NEW YORK BRANCH
, as a
Lender
|
By
|
Name:
|
|
Title:
|
|
MUFG BANK, LTD.
, as a Lender
|
By
|
Name:
|
|
Title:
|
|
NEW YORK LIFE INSURANCE COMPANY
, as a Lender
|
By
|
Name:
|
|
Title:
|
|
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
, as a
Lender
|
By
|
Name:
|
|
Title:
|
NATIONAL AUSTRALIA BANK LIMITED
, as a Lender
|
By
|
Name:
|
|||
Title:
|
By
|
Name:
|
|
Title:
|
ABN AMRO CAPITAL USA LLC
, as a Lender
|
By
|
Name:
|
|
Title:
|
By
|
Name:
|
|
Title:
|