Dubai Aerospace Enterprise (DAE), the Middle East’s biggest plane lessor, posted a 1.2 per cent rise in full-year profit.
Profit for 2019 rose to $377.5 million, compared to $372.9m in 2018, DAE said in a statement on Wednesday. Full-year total revenue dropped to $1.42 billion last year, from $1.44bn in 2018.
"Our mantra is stable, high profitability and you will see that come through in 2019 and 2018," Firoz Tarapore, chief executive of DAE, said in an interview. "2019 for us is characterised by very strong and stable financials [and] incredible progress on asset management side of the business."
In 2019, DAE completed its second full year of operations as a merged company after its takeover of Dublin-based lessor AWAS in 2017 that propelled it into the top ranks of global aircraft lessors.
DAE's net debt-to-equity ratio reached 2.64 times in 2019, compared with 2.57 times a year earlier as the number of aircraft in its fleet increased by three to 357.
Its unsecured debt as a percentage of total debt reached 62 per cent last year versus 46 per cent in 2018.
The company plans to raise $1.5bn in unsecured debt in 2020, including a potential debut sukuk issuance of $500m, Mr Tarapore told The National. The company will use the funds to buy $2bn worth of aircraft through sale-and-leaseback deals and purchases on the secondary market.
"We are liquidity-rich at the moment, we have unused liquidity right now of $2.4bn so this would add to the pile and that costs money," Mr Tarapore said. "We have to be prudent between how much we’d like to raise versus what would we do with that money."
During the year ended December 31, DAE sold 34 owned aircraft, compared to 26 owned aircraft during 2018. Of the 34 aircraft sold, 31 were sold to third parties where management of the aircraft was retained by DAE.
Expenses in 2019 increased to $720.1m, compared to $704.8m for the year before. This increase was mainly due to higher depreciation and amortisation expenses and the higher cost of providing engineering maintenance services, DAE said.
"2019 was characterized for us as a breakout year for our asset management side of the business...We launched Aircraft Investor Services, a that division helps financial investors to own and manage aircraft assets," Mr Tarapore said. "That has put us on a path to increase our relevance in the industry ... and allow us to participate in campaigns that we may not have been able to participate in."
The CEO said DAE's outlook for business in 2020 is bullish because of the "very strong" underlying fundamentals of the industry.
However, he sees headwinds from the spread of the deadly coronavirus that has crimped air travel demand, the continued grounding of the Boeing 737 Max and trade tensions.
"The suppression of demand from coronavirus will have a big impact in 2020, but once it’s contained, we should expect the resumption of normalcy," he said.
