Plane lessor DAE 'confident' of market recovery despite slide in Q1 profit

Company remains positive that faster vaccination rates in the next six months will boost air travel growth

Firoz Tarapore, CEO of government-backed Dubai Aerospace Enterprise. The plane lessor said it is confident that a faster pace of vaccinations in the next six months will aid a recovery in air travel. Show more

Dubai Aerospace Enterprise (DAE), one of the world's biggest plane lessors, said a faster pace of vaccination roll-out over the next six months will boost air travel growth, after it posted a decline in first-quarter profit.

Profit for the period fell to $8.3 million in the first three months of 2021, from $76.7m in the same period last year, DAE said in a statement on Wednesday. Adjusted profit for the period stood at $24.4m after adding back one-off debt redemption costs.

Total revenue for the first quarter dropped to $307.5m, compared to $352m in the same quarter in 2020, as net lease revenue and maintenance revenue fell.

"We remain confident that deployment of vaccines in the next six months will be faster and more broad-based than it has been, and this will form the foundation for the next leg-up in international, regional and domestic air travel growth," Firoz Tarapore, chief executive of DAE, said.

DAE said it offered relief packages during the first quarter to 38 airline customers, as the Covid-19 pandemic hurt revenues, in the form of either lease deferrals or amendments.

The value of these deferral relief packages totaled $195.5m, of which $184.1m has been incurred and $11.4m relates to future rentals.

Of the $184.1m incurred, $57.1m has been completed and $127m remains accrued at March 31, 2021.

Lease amendments, mainly involving near-term relief in exchange for lease extensions and other lease value enhancements, were valued at $139m.

“We have received a diverse range of requests and we continue to evaluate these on a case-by-case basis and to seek solutions that create value for both the airline and DAE,” the company said.

The lessor had a total owned, managed and committed fleet of 377 aircraft as of March 31. The aggregate book value of its owned fleet, including finance lease and loan receivables, was $11.6 billion. The estimated value of its managed fleet was $1.4bn.

The state-owned plane lessor, whose biggest customer is Emirates, said it grew its aircraft portfolio by taking delivery of 13 fuel efficient aircraft in the first quarter.

DAE's total available liquidity was $3.3bn in the first quarter, compared to $2.7bn at the end of December 31, 2020.

Cash and cash equivalents grew to $717.4m at the end of the quarter, from $ 577.3m in the same quarter last year.

Its net-debt-to-equity ratio was 2.65 times at the end of the quarter, compared to 2.57 times at the end of last year.