Genesis Lease Limited operates as a commercial aircraft leasing company. It acquires and leases passenger and cargo jet aircraft under long-term contracts to airlines worldwide. The company leverages the platform of General Electric Commercial Aviation Services Limited to service its portfolio of leases.
John McMahon, Chief Executive Officer of Genesis, said, “When developing our business strategy, we were very conscious of the fact that air transportation’s long history of growth and strong future prospects is allied to cyclicality and is inextricably linked to the broader economic environment. The first quarter of 2008 has seen continuing turbulence in the financial markets, reduced global economic growth expectations and record high oil prices. This has resulted in a number of airline bankruptcies, mainly in the US. Although not immune to these developments, our business strategy is structured to deal with such challenges. First, we focus on young, fuel-efficient, new-generation aircraft that remain in high demand. Second, we have a well diversified customer base, with limited exposure to any single customer or geographic region. Third, we maintain a portfolio of staggered lease contract maturities stretching out to 2019 that gives us tremendous visibility into our future cash flows. Fourth, we are uniquely positioned to leverage the worldwide platform of GE Commercial Aviation Services, who service our leases, allowing us to focus on growing the business. Finally, we are financially disciplined with no refinancing obligations for at least the next couple of years, no unfunded contractual commitments and funding capacity of more than $750 million to support continued growth of the business.”
Mr. McMahon added, “Demand and lease rates for the type of aircraft that we are focused on remains strong. Furthermore, we believe that the current economic outlook may actually result in more attractive aircraft acquisition opportunities for Genesis than were available last year.”
Mr. McMahon concluded, “Apart from the two aircraft formerly leased to Aloha Airlines, all of our aircraft with lease maturities in 2008 and 2009 have been re-contracted for lease terms averaging 82 months, at lease rentals that, in aggregate, are 9% higher than the previously contracted levels. The Aloha aircraft have already been returned and we are confident that these highly desirable, Boeing 737 Next Generation models will be re-leased in a timely fashion, at attractive lease rates.”
In line with its dividend policy, Genesis anticipates paying a dividend, subject to board approval, for the first quarter in an amount of $0.47 per share, in June 2008.
On March 21, 2008, Aloha Airlines filed for protection under US bankruptcy laws and ceased passenger operations on March 31, 2008. Genesis had two Boeing 737-700 aircraft on lease to Aloha. Both of these leases have been terminated. GECAS, as the servicer for Genesis’s aircraft portfolio, has taken possession of these aircraft and advanced re-lease negotiations are underway which may result in the incurrence of additional maintenance costs in the second quarter of the year.
As of March 31, 2008, the remaining 51 of the 53 aircraft in Genesis’s portfolio are subject to leases. All of those leases are performing and generating rents, as expected under the respective lease agreements.
genesislease.com |
