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Africa

Asia

Europe

North America

South America

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1. Given the significant margin expansion in your Aerospace Products segment, surpassing your historical 35% target, how sustainable are these margins in the face of potential cost increases or market changes, and what specific factors could pressure these margins going forward?  **[FTAI_3394087_2]** 

2. As you rely heavily on sourcing run-out engines for your business model, how are you addressing the risks of tighter supply and higher acquisition costs in the current market, and can this affect your ability to maintain margins and growth targets?  **[FTAI_3394087_15]** 

3. With your ambitious capital management plans involving significant investments in engine acquisitions and facility expansions, how do you plan to balance these investments with your goal of maintaining leverage ratios within your target range of 3x to 3.5x debt to EBITDA?  **[FTAI_3394087_19]** **[FTAI_3394087_16]** 

4. Considering that you currently serve only about one-sixth of the potential operator base for your module factory services, what are the key barriers preventing further market penetration, and how do you plan to overcome competitive challenges to significantly increase your market share?  **[FTAI_3394087_13]** 

5. Given the potential delays in material procurement and repair services due to global supply chain disruptions, how might extended lead times impact your throughput and margins, and what strategies are you implementing to mitigate these supply chain risks?  **[FTAI_3394087_14]** 

6be6c16ebc21f7a255f4665fda77ac91b77569d5f6bd2f81cb4008109a426036

FTAI Aviation Ltd. is a company that specializes in acquiring, managing, and disposing of transportation and transportation-related equipment assets. The company operates primarily in the aviation sector, focusing on leasing aviation equipment and developing aerospace products. FTAI sells aviation equipment assets, such as aircraft and engines, and manufactures aftermarket components for aircraft engines.

1. **Aerospace Products** - Develops and manufactures aftermarket components for aircraft engines, supporting the aviation industry by providing essential parts and services for aircraft engines  **[0001590364-24-000003_ftai-20231231.htm:5]** .
2. **Aviation Leasing** - Acquires aviation equipment assets, such as aircraft and engines, and leases them to companies that provide transportation services, offering long-term contractual cash flow with high cash-on-cash yields  **[0001590364-24-000003_ftai-20231231.htm:5]** .
3. **Lease Income** - Generates revenue through leasing aviation equipment to transportation service providers  **[0001590364-24-000021_ftai-20240930.htm:6]** .
4. **Maintenance Revenue** - Provides maintenance services for aviation equipment, contributing to the company's revenue stream  **[0001590364-24-000021_ftai-20240930.htm:6]** .
5. **Asset Sales Revenue** - Involves selling aviation equipment assets, contributing to the company's overall revenue  **[0001590364-24-000021_ftai-20240930.htm:6]** .
6. **Other Revenue** - Includes additional revenue streams that complement the company's main business activities  **[0001590364-24-000021_ftai-20240930.htm:6]** .

efb1aca28c478f62ab91a66d3b40fbda0dd701a3d6788a30405ebc4552d234f6

Aviation Leasing

Lease Income

Maintenance Revenue

Asset Sales Revenue

Other Revenue

Aerospace Products

Corporate and Other

Total Revenue

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| Name               | Position                                    | Start Date       | Short Bio                                                                                                                                                                                                 |
|--------------------|---------------------------------------------|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Joseph P. Adams, Jr.| Chief Executive Officer and Chairman of the Board | May 2015 (CEO), May 2016 (Chairman) | Joseph P. Adams, Jr. has served as the **Chief Executive Officer** of FTAI since **May 2015** and became the **Chairman of the Board** in **May 2016**. He is also a member of the Management Committee of Fortress Investment Group LLC and a Managing Director at Fortress within the Private Equity Group. Mr. Adams has extensive experience in the transportation industry and has served on various boards, providing valuable insights and guidance on financial and strategic planning matters  **[0001140361-24-019617_ny20022466x1_def14a.htm:8]** **[0001140361-24-019617_ny20022466x1_def14a.htm:12]** **[0001140361-22-036824_ny20005522x1_defm14a.htm:138]** . |
| Eun (Angela) Nam   | Chief Financial Officer and Chief Accounting Officer | August 2022 (CFO), August 2018 (CAO) | Eun (Angela) Nam has been serving as the **Chief Financial Officer** of FTAI Aviation since **August 2022** and as the **Chief Accounting Officer** since **August 2018**. She is also a Senior Vice President of the Fortress Private Equity group and has been involved in various mergers and acquisitions and capital markets transactions. Before joining Fortress in 2014, Ms. Nam worked in KPMG LLP's audit and risk advisory services for over ten years. She holds a Bachelor of Business Administration in Finance and Accounting from Emory University and is a certified public accountant  **[0001140361-24-019617_ny20022466x1_def14a.htm:19]** . |
| David Moreno       | Senior Executive                            | N/A              | David Moreno is a senior executive at FTAI Aviation Ltd. However, the documents do not provide specific details about his start date or further biographical information. The available information only confirms his current role within the company  **[0001140361-24-027545_ny20030051x1_ex99-1.htm:0]** . |

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- **Strong growth in the Aerospace Products segment**, driven by increased module sales and USM (used serviceable material) activities. Module sales are expected to grow from approximately **130 units in 2023 to around 200 units in 2024**, contributing to a blended margin of around **35%**.  **[FTAI_3362365_4]** **[FTAI_3362365_9]** **[FTAI_3362365_15]**
- **Robust demand for leasing assets**, leading to higher lease rates and better terms. The company intentionally terminated leases to a carrier in Southeast Asia to secure **higher rates and better terms**, capitalizing on the **strong demand** for their assets globally. Additionally, issues with new technology engines are increasing demand for prior technology equipment, benefiting FTAI's leasing business.  **[FTAI_3362365_6]** **[FTAI_3362365_2]**
- **Successful repeat business in module sales**, achieving a **100% success rate** with customers returning for additional purchases. Customers have placed orders for 2024, indicating confidence in FTAI's offerings and supporting future growth.  **[FTAI_3362365_19]**

bb50f81f687e5e2985a753b8303884f4c2a3fc9280f60129ae6d146ef40cd4cd

- The company's strong adjusted EBITDA figures include one-time, noncash gains, such as a **$5 million** accounting gain in Q4 2023, which may not be repeated in future periods, potentially overstating performance.  **[FTAI_3374970_10]**
- The company has significant notes maturing in **October 2025**, but has not yet formulated a refinancing plan, which could pose a risk if market conditions deteriorate before they act.  **[FTAI_3374970_15]**
- **Delays and uncertainties in FAA approval processes** could impact the company's PMA initiatives, making it difficult to predict when they will contribute to earnings and potentially affecting future growth.  **[FTAI_3374970_4]** ,  **[FTAI_3374970_13]**

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- FTAI Aviation announced a **perpetual power agreement with LATAM Airlines covering over 60 V2500 and CFM56 engines**, illustrating growing acceptance by airlines to outsource maintenance, which is expected to significantly boost Aerospace Products EBITDA over the next 2-3 years.  **[FTAI_3381118_2]**
- The company is **reaffirming its annual Leasing EBITDA target of $425 million for 2024**, expecting meaningful growth starting in Q2 due to strong demand and seasonal factors.  **[FTAI_3381118_11]**
- FTAI is expanding into **Southeast Asia, a huge market opportunity**, which is expected to become a significant growth driver, potentially including new maintenance facilities in the region.  **[FTAI_3381118_18]**

576f3d40fd37b65b75bd4720f962842b8d6f5b9915c4dcbe22b023c2c9f9f747

- FTAI's current strong performance is heavily dependent on **supply chain disruptions** and high demand for older equipment; normalization of supply chains could reduce demand for their services and negatively impact revenues.  **[FTAI_3394087_10]** **[FTAI_3394087_11]**
- The company is increasing leverage by investing **$500 million** to add **100 new engines**, raising concerns about financial risk if market conditions deteriorate. They plan to maintain debt at **3x to 3.5x EBITDA**.  **[FTAI_3394087_19]** **[FTAI_3394087_20]** **[FTAI_3394087_16]**
- FTAI's projected margin expansion in Aerospace Products relies on factors like achieving **Parts Manufacturer Approval (PMA)** and controlling costs; failure to realize these could limit profitability growth.  **[FTAI_3394087_22]** **[FTAI_3394087_2]**

671af1ff9a7247d096416fd326df3b4ed35a2140efbb9df68adf44a7329fc3ed

1. **Margin Outlook**  
   **Q:** How will margins evolve with Lockheed acquisition?  
   **A:** Margins are trending up due to increased revenues and controlled expenses. With the Lockheed Martin facility, we expect margins to **trend towards 40%** and continue growing as we gain experience and increase volume. This includes approximately **$30 million of annual savings**, adding **3 to 4 percentage points** to margins.  **[FTAI_3394087_3]** 

2. **Internalization Savings**  
   **Q:** Will internalization savings exceed prior estimates?  
   **A:** Yes, we initially anticipated **$30 million** in annual savings but now expect this to grow to **$40 million to $50 million** in the next couple of years, potentially higher.  **[FTAI_3394087_6]** 

3. **Demand Outlook**  
   **Q:** What's the demand outlook for CFM56 and V2500 engines?  
   **A:** We have long-term contracts providing **6- to 8-year visibility** with airlines like WestJet, LATAM, and Avianca. For transactional business, we have **3- to 6-month visibility**, improving planning and material ordering.  **[FTAI_3394087_12]** 

4. **Capital Allocation**  
   **Q:** What are your capital management priorities?  
   **A:** First, achieve and maintain a **strong BB rating** with debt to EBITDA at **3x to 3.5x**. Second, invest in growing our engine count, targeting **150 to 200 V2500 engines** by year-end. Afterwards, we'll consider shareholder returns via dividends and buybacks.  **[FTAI_3394087_19]** 

5. **Engine Sourcing**  
   **Q:** Are engine acquisitions becoming more challenging?  
   **A:** We excel in sourcing engines needing near-term shop visits. We can perform shop visits at lower costs and optimize through module swaps, making these acquisitions more viable for us than competitors.  **[FTAI_3394087_15]** 

6. **Supply Chain Impact**  
   **Q:** How will supply chain normalization affect you?  
   **A:** We operate assuming normalization; current supply issues are an unexpected benefit. Normalization will be gradual, and our business remains strong even as operations return to normal.  **[FTAI_3394087_11]** 

7. **PMA Parts Update**  
   **Q:** What's the status of PMA parts development?  
   **A:** We're making good progress and expect approvals soon. Our first part is installed in **15 engines**, performing well with no issues. Industry acceptance is growing, also helping with supply chain challenges.  **[FTAI_3394087_24]** 

8. **Piece-Part Repair Expansion**  
   **Q:** Is Piece-Part repair growth organic or inorganic?  
   **A:** Both. Our base plan is organic growth, but we're open to working with industry partners. There's insufficient global capacity, presenting significant opportunities for us.  **[FTAI_3394087_5]** 

9. **Free Cash Flow Expectations**  
   **Q:** How should investors view free cash flow and leverage?  
   **A:** We expect to generate **hundreds of millions** in free cash flow soon. We'll maintain leverage at **3x to 3.5x EBITDA**, focusing on faster asset turnover rather than constant growth.  **[FTAI_3394087_16]** 

10. **Potential M&A**  
    **Q:** Would you consider being acquired?  
    **A:** We're shareholder-oriented and would entertain the right offer. It's ultimately a board-level decision, and we're open to opportunities benefiting shareholders.  **[FTAI_3394087_18]** 

11. **Vessel Sales Progress**  
    **Q:** What's the status of vessel sales?  
    **A:** The market is improving; we have a handshake deal on both vessels, expecting to close by year-end. They're generating EBITDA, and we anticipate proceeds around **$150 million**, in line with expectations.  **[FTAI_3394087_25]** 

b440dcb492074958e14e6ff8de5a00f214c2011fbe8962a20adc243027ea132e

- **Decrease in Lease Income:** FTAI experienced a **decline in lease income**, both sequentially and year-over-year. This was due in part to the intentional termination of four A320 aircraft leases to secure higher rates and better terms. Additionally, accounting treatments like amortization of lease incentives reduced lease revenue, leading to confusion among analysts.  **[FTAI_3362365_6]**
- **Uncertainty in Recovering Assets from Russia and Ukraine:** The company has assets tied up due to the Russia and Ukraine conflict, including insurance claims and ships awaiting sale. While FTAI expects combined proceeds of around **$300 million**, the timing is uncertain, with negotiations possibly resolving by the middle of next year. This dependency introduces liquidity risks.  **[FTAI_3362365_19]**
- **Potential Increase in Debt Financing:** FTAI is considering **additional debt financing** to fund attractive investment opportunities. This may increase the company's leverage and financial risk, especially given the uncertain timing of liquidity from asset recoveries related to Russia and ship sales.  **[FTAI_3362365_20]**

10ce80571dc980f0ae12c00db212acc9767af2015cca141f0a5d4e94f3166777

- **Significant delay in revenue contribution from major contracts** like the LATAM Airlines agreement, with EBITDA ramp-up expected over 2-3 years, potentially delaying earnings growth.  **[FTAI_3381118_2]** ,  **[FTAI_3381118_3]**
- **Leasing segment EBITDA was depressed in Q1** due to off-lease aircraft and seasonal factors, indicating potential volatility in leasing earnings.  **[FTAI_3381118_11]**
- **Cash flow from operations was neutral in Q1**, and while improvement is anticipated, current cash flow generation is not robust, which may affect financial flexibility.  **[FTAI_3381118_6]**

1f9a5d893cd981d0f50e7059230a6b3945b172e6971108bd1a52bf26f7d86504

- **Strong growth in the Aerospace Products segment**, with **Adjusted EBITDA of $54.6 million in Q4 2023**  **[FTAI_3374970_10]** , and expectations to generate EBITDA **towards the middle or higher end of the $200 million to $250 million range in 2024**.  **[FTAI_3374970_1]**
- **Lease rates for engines have increased to $75,000 plus maintenance reserves**, up from pre-COVID rates of $60,000, due to a **shortage of CFM56 and V2500 engines**, leading to higher revenues in the leasing segment.  **[FTAI_3374970_4]**
- **Expansion into the V2500 engine market**, expecting to add **$25 million in EBITDA in 2024** with potential upside  **[FTAI_3374970_6]** , and plans to increase V2500 engine ownership from **60 to 150-200 engines** by the end of the year  **[FTAI_3374970_11]** , offering a **complete aftermarket power solution** for 737NG and A320-NEO aircraft globally.  **[FTAI_3374970_6]** **[FTAI_3374970_11]**

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- **Rapid Growth in Aerospace Products with Increasing Margins**: FTAI Aviation's Aerospace Products segment is experiencing tremendous growth, with EBITDA margins surpassing the historical target of 35% and trending towards **40%** due to higher revenues and controlled costs. The demand for their products is very high, and they are becoming more efficient in operations.  **[FTAI_3394087_2]**
- **Expanding Module Swap Business with Significant Market Potential**: The company has increased its module swaps, performing **82 swaps** in the quarter, and now works with **50 customers**, which is about **1/6 of the 300 total potential operators**. With current market penetration around **5%**, there is substantial room for growth in this huge market. FTAI has the capacity to handle more, with facilities capable of rebuilding **1,350 modules** per year.  **[FTAI_3394087_13]**
- **Strong Free Cash Flow Generation and Strategic Capital Management**: FTAI expects to generate **hundreds of millions of free cash flow** in the near future by turning assets faster rather than continually acquiring more equipment. The company maintains a strong BB rating with debt to EBITDA in the **3x to 3.5x range**, focusing on financial strength while planning for future dividends and stock buybacks.  **[FTAI_3394087_16]**

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FTAI Aviation Ltd (FTAI)

Financials