First Quarter 2020 Earnings May 8, 2020
Forward-Looking Statements This presentation contains certain “forward -looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward- looking statements may be identified by words such as “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “will,” or words of similar meaning and include, but are not limited to, statements regarding the outlook for FLY’s future business, operations and financial performance. Forward-looking statements are based on management’s current expectations and assumptions, which are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and results may differ materially due to global political, economic, business, competitive, market, regulatory and other factors and risks, and the risk that FLY may be unable to achieve its portfolio growth expectations, or to reap the benefits of such growth. Additional or unforeseen effects from the COVID-19 pandemic and the global economic climate may give rise to or amplify many of these risks. Further information on the factors and risks that may affect FLY’s business is included in filings FLY makes with the Securities and Exchange Commission from time to time, including its Annual Report on Form 20-F and its reports on Form 6-K. FLY expressly disclaims any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in its views or expectations, or otherwise. Notes: 1. All period end figures are as of March 31, 2020 except as otherwise noted. Any 2020 year-to-date data is as of May 5, 2020. 2. Fleet age and lease term are calculated using the weighted net book value of flight equipment held for operating lease, including maintenance rights and investment in finance lease, at period end. 3. In addition to U.S. GAAP financials, this presentation includes certain non-GAAP operating and financial measures. These non-GAAP operating and financial measures are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with U.S. GAAP. We have provided a reconciliation of those measures to the most directly comparable GAAP measures in the Appendix. For further information, please refer to FLY’s earnings press release dated May 8, 2020. 4. Flag carriers are international airlines, which may be wholly or partly owned by the national government, that have a strong association with their home country or represent their home country internationally. 2
Colm Barrington CEO
Unprecedented time in aviation − Severe reduction in airline operations − Airline liquidity and viability are major issues Managing − Expect airline defaults and failures Through COVID-19 − Many governments offering airlines support FLY business model capable of withstanding downturns − Popular aircraft types, primarily narrowbody − No aircraft orders from manufacturers, selective CapEx − Long-dated financing BBAM has managed through several industry crises − Long-term aircraft lease manager with 30+ years of history − Seasoned management team − Full service global platform with long-standing customer relationships 4
Managing Through COVID-19 ACTIVE MANAGEMENT BY BBAM • Focus on enhancing liquidity • Actively protect asset value • Manage rent deferral requests ➢ Expect to grant for lessees representing ~70% of annualized rental revenue − Deferral period ~4 months − Repayment generally within 2020 • Strong alignment of interests ➢ BBAM shareholders own 23% of FLY shares 5
CASH POSITION UNTAPPED RESOURCES $560 M $361 M FLY’s Strong UNENCUMBERED ASSETS UNRESTRICTED CASH Financial Position ALL-TIME LOW LEVERAGE LONG-TERM DEBT No 2.1x NEAR-TERM NET DEBT TO EQUITY REFINANCING NEEDS NO 2020 ORDERS FINANCING FLEXIBILITY Proven Zero TRACK RECORD OF DIVERSIFIED MANUFACTURER COMMITMENTS FINANCING SOURCES 6
Strong Liquidity Position UNRESTRICTED CASH NET DEBT TO EQUITY AND UNENCUMBERED ASSETS (in millions) $925 $921 3.4x $651 2.3x $560 $639 2.1x $286 $364 $361 $286 Q1 2019 Q4 2019 Q1 2020 Q1 2019 Q4 2019 Q1 2020 Unrestricted Cash Unencumbered Assets 7
$1.42 $44 M $122 M ADJUSTED ADJUSTED NET TOTAL REVENUES First Quarter EPS INCOME Highlights 26% $32 M 20% INCREASE IN ADJUSTED ROE GAIN ON SALE UNRESTRICTED CASH $29.21 BOOK VALUE PER SHARE 8
Aircraft Sales & Acquisitions Sales 20% • Six aircraft and two engines sold in Q1 – $31.7M gain; 20% premium PREMIUM TO NET BOOK VALUE ON Q1 AIRCRAFT SALES – Average age over 10 years Acquisitions 3 • One 737 NG acquired in Q1 • Two 737 NGs acquired in Q2 AIRCRAFT ACQUISITIONS • No AirAsia deliveries anticipated this year TO DATE 9
Julie Ruehl CFO
Q1 Financial Highlights $38 M Q1 2020 Q1 2019 ($ in millions, except EPS) NET INCOME Net Income $38.1 $45.0 $1.24 Earnings Per Share $1.24 $1.38 EARNINGS PER SHARE Return On Equity 17.2% 25.0% 17.2% Net Spread (1) 7.5% 7.2% RETURN ON EQUITY 11 (1) See appendix for definition of Net Spread.
Revenue Comparison Q1 2020 Q1 2019 (in millions) $32 M Operating Lease Rental Revenue $85.5 $105.3 End of Lease Income 2.4 1.6 GAIN ON SALE Amortization of Lease Incentives and Other (0.5) (1.6) Operating Lease Revenue $87.4 $105.3 Finance Lease Income 0.1 0.2 $122 M Gain on Sale of Aircraft 31.7 27.6 TOTAL REVENUES Other Income 2.3 1.7 Total Revenue $121.6 $134.7 Note: Sums may not foot due torounding. 12
Expense Comparison (in millions) Q1 2020 Q1 2019 Depreciation $31.6 $37.6 Interest Expense 27.2 38.2 Selling, General and Administrative 7.7 8.7 Loss on Derivatives 0.5 – Unrealized loss 9.4 Fair Value Loss on Marketable Securities 9.4 – on E-notes; revalued quarterly Loss on Extinguishment of Debt 0.9 2.2 Maintenance and Other Costs 1.2 0.6 Total Expenses $78.4 $87.3 13 Note: Sums may not foot due torounding
Q1 Impairment Analysis NO AIRCRAFT IMPAIRMENT RECORDED • Robust process undertaken to review fleet • Impairment exists if net book value of aircraft exceeds undiscounted cash flows • Continually monitoring for changes in circumstances that may indicate potential impairment 14
Debt Profile Balloon Payments Due at Debt Maturity 2020 2021 2022 2023 2024 2025 (in millions) • No near-term debt Non-Recourse Debt maturities Other Bank Debt Non-Recourse $10 – – $26 – – Fly Aladdin Acquisition Facility – – – $162 – – • Reduced cost of debt Nord LB Facility – $57 – – – – via liability Non-Recourse Total $10 $10 $57 $57 – $188 $188 – – management Recourse Debt Other Bank Debt Recourse – – $13 $71 $18 – • Secured debt is Term Loan – – – – – $262 amortizing; reduces Magellan Acquisition Facility – – – – – $119 Fly Aladdin Engine Funding Facility – $31 $8 – – – leverage and 2024 Notes (Unsecured) – – – – $300 – refinancing risk $325 (1) 2021 Notes (Unsecured) – – – – – Recourse Total – $356 $356 $21 $21 $71 $71 $318 $318 $381 $381 Total Debt $10 $10 $413 $413 $21 $21 $259 $259 $318 $318 $381 $381 15 (1) Maturity date October 2021.
Long-Dated Ample Liquidity Financing and Low Leverage Summary No Near-Term Strong Customer Base CapEx Requirements 50% flag carriers and US majors Modern Fleet, World-Leading Predominantly BBAM Management Narrowbodies 16
Appendices
Fleet of 84 Modern Aircraft 28% 36% AIRBUS A320ceo BOEING 737NG 33 38 FAMILY NBV NBV AIRBUS A320neo BOEING 787 2% 15% 4 1 FAMILY 6% 10% AIRBUS A330 BOEING 777-LRF 3 2 BOEING 737 MAX 3% CFM ENGINES 7 2 Leased Separately BOEING 757-SF <1% 5.2 7.8 1 YEARS AVG. AGE YEARS AVG. LEASE TERM 18 Note: Percentages represent weighted average net book value.
Diversified Customer Base 40 Airlines in 24 Countries Top 10 Lessees Geographic Diversity flydubai flyd Mala alaysia Thai ai AirA irAsia AirA irAsia Other Oth 3% 3% 18% 18% 3% 3% Ber erhad 16% 16% Lion Air Lio ir 11% 11% 3% 3% UAE Tra ransavia 3% 3% 3% 3% Thai ailand 3% 3% (1) In India USA SA Air ir In India Air ir Euro ropa 16% 16% 3% 3% 11% 11% 4% 4% Fr Fran ance 3% 3% Sp Spai ain Mala alaysia 5% 5% Airl irlines 7% 7% Chin ina 6% 6% Eth thiopia 10% 10% Indonesia In Phili ilippine Phili ilippines Eth thiopian 8% 8% Airl irlines 9% 9% Airl irlines 8% 8% 10% 10% Note: Percentages by net book value. Sums may not foot due to rounding. 19 (1) Air India leases are guaranteed by the Indian government.
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