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DAE announced today that it ended 1Q2020 with available liquidity of approximately US$2.8 billion. DAE’s owned, managed and mandated-to-manage fleet exceeded 400 aircraft. During 1Q2020, DAE sold or novated 15 aircraft, acquired 4 aircraft and transitioned or extended leases on 8 aircraft.
Firoz Tarapore, DAE’s Chief Executive Officer said, “In these unprecedented times, DAE has positioned itself to operate calmly and to balance the needs of all our important constituents – employees, customers, bondholders and banks, and shareholders. During the last two years, we:
- raised significant liquidity to protect our business from unforeseen market developments,
- sold more assets than we acquired to proactively manage our portfolio composition,
- refrained from placing speculative OEM orders to avoid steep contingent liabilities, and
- built a large-scale aircraft asset management business to help investors navigate the complexities of committing capital to this sector.
These actions have contributed to the making of a fortified balance sheet. Today, we have over US$2.8 billion of available liquidity and modest liquidity requirements of approximately US$430 million for bond maturity and capex commitments over the next 12 months.
Employees: Our Business Continuity Plan provides our employees worldwide with the option to work from one of our offices or from remote locations with seamless and secure connectivity to workplace systems and data. As of today, approximately 90% of our team is contributing near-seamlessly from remote locations. Our investment in connectivity technology over the last two years serves us well in today’s operating environment. Keeping our employees healthy and safe and maintaining our business rhythm continue to be our top priorities.
Customers: Revenues for our customers have been disrupted in significant, unprecedented and unforeseen ways as governmental authorities around the world put in place necessary isolation measures to contain the spread of the coronavirus. We continue to receive requests for assistance in different shapes and sizes, and we evaluate them on a case-by-case basis. To date, we have granted 11 rent deferral requests totaling aggregate rent of approximately 2% of annual reported revenue. We are currently evaluating an additional 42 rent deferral requests totaling aggregate rent of approximately 16% of annual reported revenue. We expect to provide additional assistance to our clients and we also expect arrears to climb as our clients cope with an unprecedented cessation of demand.
Bondholders and Banks: In these unprecedented times where market pricing is driven by supply and demand of liquidity rather than by fair value, we are supporting our bondholders’ need for liquidity by restarting our bond repurchase program. In early March, we added to the size of this program and we repurchased approximately US$170 million in 1Q2020. We have remaining authorization of approximately US$245 million. We have taken a balanced approach to drawing down our committed lines of credit and as of today we have drawn down 25% of available capacity. Today, we have unrestricted cash in excess of US$550 million. The bulk of the remainder of our committed lines of credit is from strongly rated financial institutions who have access to systemic liquidity from various central banks, as and if needed.
Shareholders: Our shareholder, the Investment Corporation of Dubai, has been consistently supportive of our growth objectives and has made capital and liquidity available to DAE when needed over the past 14 years. We received full and early repayment in 1Q2020 of the shareholder loan receivable of approximately US$800 million. We use our capital adequacy metric (Net Debt-to-Equity) to calibrate the level of capital we need in our business to support our current set of activities and our future requirements. In 1Q2020, the strength of our capital position allowed us to repurchase US$250 million of shares at attractive price-to-book valuation metrics. We expect no material change to our 1Q2020 Net Debt-to-Equity metric.
Around the world, millions of people are working from home. The more we work from home, the more we appreciate the camaraderie and productivity benefits of a professional office environment. The more we interact by videoconference, the more we begin to appreciate the value of face-to-face interaction and the need for human contact. Aviation will emerge stronger than ever after the current extreme situation stabilizes in stages around the globe albeit at a pace that is currently unascertainable. DAE is well-positioned and well-resourced to grow its portfolio in this environment by providing financing and leasing solutions to airline clients for existing and new aircraft.”
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