Fly Leasing has hired Goldman Sachs to undertake a strategic review of its business, including a potential sale of part or all of the publicly traded operating lessor, Airfinance Journal sources indicate.
The lessor, which has an 86-aircraft fleet and seven engines managed by BBAM, declined to comment on “rumours or market speculation”.
Sources indicate select parties have been invited to bid on the portfolio. Those bids were due last week.
Airfinance Journal understands that the intent is to confirm second-round bidders no later than mid-January as a mandate could be awarded by the end of the first quarter, if the sale goes ahead. But subject to all regulatory approvals, a closing could take another six months, according to a source.
The review comes as the airline industry seeks to stave off losses of more than $80 billion this year, according to industry group IATA. Original equipment manufacturers, lessors and the supply chain also have been badly hit by the collapse in global travel as a result of the crisis.
Despite the challenges of the coronavirus, though, Fly chief executive officer Colm Barrington remains optimistic.
“We are encouraged by improved domestic air travel demand in the quarter and the recent news of successful vaccine trials, which we believe will drive a recovery in air travel demand in 2021,” Barrington said during the release of Fly’s third-quarter results.
Last month, the lessor said a drop in revenues collected and a lack of aircraft sales contributed to a net loss of $8.1 million in the third quarter.
The decrease in net income was primarily due to the “non-recognition of revenue” for certain lessees and no aircraft sales in the quarter.
Before the pandemic, it made a profit of $51.7 million in the same quarter a year earlier.
To buttress the balance sheet, Fly raised a new $180 million term loan in October, which will be used to pay down debt.
Total cash amounted to $307 million, of which $285 million was unrestricted.
Fly’s total assets were $3.5 billion at quarter-end, including investment in flight equipment totalling $3 billion.
The average age of the portfolio, weighted by net book value of each aircraft and engine, was 8.3 years.
The average remaining lease term was 4.9 years, also weighted by net book value.