Air Lease Plans to Tap Portion of $6 Billion in Backup Loans

(Bloomberg) -- Air Lease Corp., one of the world’s largest aircraft leasing companies, is planning to draw down a portion of its $6 billion in backup loans, according to people with knowledge of the matter, making it the latest company to shore up its finances as the coronavirus pandemic roils global markets.

The company -- which leases planes to airline customers, many of which have reduced their flight schedules amid travel bans and reduced demand -- has held talks with bank lenders about the plan, said the people, who asked not to be identified because the matter is private.

The Los Angeles-based company had an undrawn balance of $6 billion in unsecured revolving credit facilities as of Dec. 31, according to filings.

“As we have done in the past, we will utilize the revolver in the normal course of business,” the company said in a statement. “The Company sees no current need to fully draw down on the revolver due to our strong liquidity position.”

“It has been extremely tough in particular for our China and Asia airline customers with flight cancellations and dramatic drop-off in traffic,” Air Lease Chief Executive Officer John L. Plueger said on an earnings call with analysts last month. “We have received requests for assistance from some lessees and as always, we are working with our customers as needed.”

Air Lease joins rival AerCap Holdings NV as well as other corporations including Boeing Co., Hilton Worldwide Holdings Inc. and Wynn Resorts Ltd. in leaning harder on billions of dollars in credit facilities and other forms of backup loans.

Private equity titans Blackstone Group Inc. and Carlyle Group Inc. have advised some of the businesses they control to consider similar measures to prevent potential shortfalls.

Separately, Delta Air Lines Inc. raised $1 billion in equipment financing, while Air France-KLM drew down 1.1 billion euros ($1.2 billion) from a revolving credit facility to bolster its available liquidity.

Air Lease’s shares have fallen roughly 50% in the past month, outpacing the decline in the S&P 500 index. On Friday, the stock slid as much as 8.3% to $20.57.

If infection rates start declining and mortality rates stay low, then airlines could see a surge of deferred summer bookings in mid-to late-May, Plueger said in a March 2 interview.

For now, Air Lease is in discussions to buy aircraft and defer rents for some airlines hardest hit by the drop in traffic, Plueger said on the sidelines of a conference of aircraft financiers, manufacturers and operators last week.

Over more than a half century, commercial aviation has weathered so-called “black swan” events where air traffic stalls, and comes back stronger in the end, Plueger said.

“There’s no doubt in my mind that this, too, shall pass,” he said.

--With assistance from Julie Johnsson and Claire Boston.

To contact the reporters on this story: Gillian Tan in New York at gtan129@bloomberg.net;Paula Seligson in New York at pseligson@bloomberg.net;Sridhar Natarajan in New York at snatarajan15@bloomberg.net

To contact the editors responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net, Craig Giammona, Christine Maurus

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