Dubai plane lessor DAE reports 48% rise in first-quarter profit

The results reflect a strong operating environment for airlines, chief executive says

DAE’s profit before exceptional items rose to $69.2 million during the three-month period to the end of March. Photo: DAE Capital

Dubai Aerospace Enterprise, one of the world's biggest plane leasing companies, said first-quarter profit rose by more than 48 per cent as it benefitted from an acquisition that increased the size of its fleet.

Profit before exceptional items in the three months to the end of March rose to $69.2 million, from $46.6 million a year earlier, the company said on Wednesday.

“Our first quarter 2023 financial results reflect a strong operating environment for airlines, an improving collections and credit profile, and profitable divestment activity,” said DAE chief executive Firoz Tarapore.

“We have successfully integrated the acquisition of Sky Fund I into our platform following the acquisition in the fourth quarter of 2022.”

Following the deal, DAE Capital’s fleet of owned, managed and committed aircraft, as well as those it has a mandate to manage, grew to about 500, DAE said in November.

DAE’s revenue in the first quarter rose to $315.2 million, from $298 million in the same period last year.

“Our profitability improved substantially during the quarter, and our credit quality and liquidity remained strong,” said Mr Tarapore.

“Interest rate volatility allowed us to repurchase $205 million of principal amount of our bonds during the quarter. We have increased our bond repurchase authorisation following additional repurchases in the second quarter.”

DAE's performance was boosted by air travel recovery, which, in turn, is driving up airlines' demand for aircraft. On the other hand, supply chain strains facing the aerospace industry are delaying aircraft deliveries.

Global passenger traffic rebounded to 15 per cent below its pre-pandemic levels in February, led by airlines in Asia-Pacific, which recorded the fastest growth, the International Air Transport Association said in its latest report.

Total passenger traffic worldwide increased 55.5 per cent on an annual basis in February, despite the uncertainties hanging over the global economy, Iata said.

Meanwhile, international passenger traffic rose 89.7 per cent from February 2022 and reached 77.5 per cent of February 2019 levels.

DAE reported a full-year 2022 loss after it wrote off $538 million on aircraft operating in the fleet of Russian airlines.

In November, DAE said it “has no way” to determine whether the aircraft it had leased to Russian aviation operators would be returned.

The group has insurance cover for 19 aircraft under a number of policies and it has filed “insurance claims and a litigation claim to recover amounts due under the policies”, DAE said at the time, without providing further details.

In December, DAE said it signed new deals for unsecured term financing worth $800 million to maintain its strong liquidity levels.

As of March 31, the company's available liquidity stood at $2.64 billion compared with $2.66 billion on December 31, 2022.