First Quarter 2020 Earnings May 8, 2020 Forward-Looking Statements - - PowerPoint PPT Presentation

First Quarter 2020 Earnings

May 8, 2020

Forward-Looking Statements

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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

• f 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.

Colm Barrington

CEO

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Managing Through COVID-19

Unprecedented time in aviation

− Severe reduction in airline operations − Airline liquidity and viability are major issues − Expect airline defaults and failures − 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

ACTIVE MANAGEMENT BY BBAM Managing Through COVID-19

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• 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

2.1x

NET DEBT TO EQUITY

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$361M

UNRESTRICTED CASH

$560M

UNENCUMBERED ASSETS

Proven

TRACK RECORD OF DIVERSIFIED FINANCING SOURCES

No

NEAR-TERM REFINANCING NEEDS

Zero

MANUFACTURER COMMITMENTS CASH POSITION UNTAPPED RESOURCES FINANCING FLEXIBILITY ALL-TIME LOW LEVERAGE NO 2020 ORDERS LONG-TERM DEBT

FLY’s Strong Financial Position

Strong Liquidity Position

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$364 $286 $361

$286 $639 $560

Q1 2019 Q4 2019 Q1 2020 Unrestricted Cash Unencumbered Assets

$651

UNRESTRICTED CASH AND UNENCUMBERED ASSETS

(in millions)

3.4x 2.3x 2.1x

Q1 2019 Q4 2019 Q1 2020

NET DEBT TO EQUITY

$921 $925

$32M

GAIN ON SALE

$44M

ADJUSTED NET INCOME

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First Quarter Highlights

$122M

TOTAL REVENUES

$1.42

ADJUSTED EPS

20%

ADJUSTED ROE

26%

INCREASE IN UNRESTRICTED CASH

$29.21

BOOK VALUE PER SHARE

Aircraft Sales & Acquisitions

Sales

• Six aircraft and two engines sold in Q1

– $31.7M gain; 20% premium – Average age over 10 years

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20%

PREMIUM TO NET BOOK VALUE ON Q1 AIRCRAFT SALES

Acquisitions

• One 737 NG acquired in Q1
• Two 737 NGs acquired in Q2
• No AirAsia deliveries anticipated this year

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AIRCRAFT ACQUISITIONS TO DATE

Julie Ruehl

CFO

Q1 Financial Highlights

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($ in millions, except EPS)

Q1 2020 Q1 2019

Net Income $38.1 $45.0 Earnings Per Share $1.24 $1.38 Return On Equity 17.2% 25.0% Net Spread(1) 7.5% 7.2%

$1.24

EARNINGS PER SHARE

$38M

NET INCOME

17.2%

RETURN ON EQUITY

(1) See appendix for definition of Net Spread.

Revenue Comparison

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(in millions)

Q1 2020 Q1 2019 Operating Lease Rental Revenue $85.5 $105.3 End of Lease Income 2.4 1.6 Amortization of Lease Incentives and Other (0.5) (1.6) Operating Lease Revenue $87.4 $105.3 Finance Lease Income 0.1 0.2 Gain on Sale of Aircraft 31.7 27.6 Other Income 2.3 1.7 Total Revenue $121.6 $134.7

Note: Sums may not foot due torounding.

$122M

TOTAL REVENUES

$32M

GAIN ON SALE

(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 – Fair Value Loss on Marketable Securities 9.4 – Loss on Extinguishment of Debt 0.9 2.2 Maintenance and Other Costs 1.2 0.6 Total Expenses $78.4 $87.3

Note: Sums may not foot due torounding

Expense Comparison

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9.4

Unrealized loss

• n E-notes;

revalued quarterly

Q1 Impairment Analysis

• 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

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NO AIRCRAFT IMPAIRMENT RECORDED

Debt Profile

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• No near-term debt

maturities

• Reduced cost of debt

via liability management

• Secured debt is

amortizing; reduces leverage and refinancing risk

Balloon Payments Due at Debt Maturity

(in millions)

2020 2021 2022 2023 2024 2025 Non-Recourse Debt Other Bank Debt Non-Recourse $10 – – $26 – – Fly Aladdin Acquisition Facility – – – $162 – – Nord LB Facility – $57

–

– – – Non-Recourse Total $10 $10 $57 $57 – $188 $188 –

–

Recourse Debt Other Bank Debt Recourse – – $13 $71 $18 – Term Loan – – – – – $262 Magellan Acquisition Facility – – – – – $119 Fly Aladdin Engine Funding Facility – $31 $8 – – – 2024 Notes (Unsecured) – – – – $300 – 2021 Notes (Unsecured) – $325(1) – – – – 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

(1) Maturity date October 2021.

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Summary

No Near-Term CapEx Requirements Strong Customer Base

50% flag carriers and US majors

Long-Dated Financing and Low Leverage Modern Fleet, Predominantly Narrowbodies Ample Liquidity World-Leading BBAM Management

Appendices

AIRBUS A320neo FAMILY AIRBUS A330 AIRBUS A320ceo FAMILY BOEING 787 BOEING 777-LRF BOEING 757-SF BOEING 737 MAX BOEING 737NG

1 2 4 3 33

Fleet of 84 Modern Aircraft

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5.2

YEARS AVG. LEASE TERM

7.8

YEARS AVG. AGE

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Note: Percentages represent weighted average net book value.

28%

NBV

15% 10% <1%

2

3% 36%

NBV

CFM ENGINES

Leased Separately

7 1

2% 6%

Diversified Customer Base

40 Airlines in 24 Countries Geographic Diversity

Mala alaysia 18% 18% In India 16% 16% Eth thiopia 10% 10% Phili ilippines 9% 9% In Indonesia 8% 8% Chin ina 6% 6% Sp Spai ain 5% 5% Fr Fran ance 3% 3% USA SA 3% 3% Thai ailand 3% 3% UAE 3% 3% Oth Other 16% 16%

Note: Percentages by net book value. Sums may not foot due to rounding. (1) Air India leases are guaranteed by the Indian government. 19

Top 10 Lessees

AirA irAsia Ber erhad 11% 11% Air ir In India 11% 11% Eth thiopian Airl irlines 10% 10% Phili ilippine Airl irlines 8% 8% Mala alaysia Airl irlines 7% 7% Air ir Euro ropa 4% 4% Tra ransavia 3% 3% Lio Lion Air ir 3% 3% flyd flydubai 3% 3% Thai ai AirA irAsia 3% 3%

(1)

Note: Sums may not foot due to rounding. (1) Represents the contractual interest rates and effect of derivative instruments and excludes the amortization of debt discounts and debt issuance costs. (2) Represents the ratio of total debt, less unrestricted cash and cash equivalents, divided by shareholders’ equity.

Capital Structure & Liquidity Overview

($ in millions) March 31, 2020 December 31, 2019 Unrestricted cash and cash equivalents $361 $286 Unencumbered assets $560 $639 O /S Rate(1) O /S Rate(1) Maturity Term Loan $380 4.02% $385 4.15% 2025 Nord LB Facility 64 2.55% 65 3.59% 2021 Other Bank Debt Facilities 595 3.96% 674 4.07% 2020-2028 Magellan Acquisition Facility 272 4.01% 279 4.11% 2025 Fly Aladdin Acquisition Facility 246 4.83% 272 4.85% 2023 Fly Aladdin Engine Funding Facility 42 4.95% 42 4.95% 2021-2022 Unamortized Discounts and Loan Costs (20) (22) Total Secured Debt $1,579 4.09% $1,696 4.22% 2021 Notes 325 6.38% 325 6.38% 2021 2024 Notes 300 5.25% 300 5.25% 2024 Unamortized Discounts and Loan Costs (5) (6) Total Unsecured Debt $620 5.84% $619 5.84% Total Debt 2,199 4.58% 2,315 4.65% Shareholders' Equity 890 878 Total Capitalization $3,089 $3,192 Debt to Equity Net Debt to Equity(2) Secured Debt to Total Debt 2.5x 2.1x 72% 2.6x 2.3x 73% Total Debt to TotalCapitalization 71% 72%

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Aircraft Remarketing Schedule

21 Note: Excludes aircraft that are under LOI and lease agreements, as of the date of this presentation.

THREE YEAR REMARKETING REQUIREMENTS 2020 2021 2022

Number of Aircraft

3 14 18

Percentage of NBV

3% 9% 14%

Adjusted Net Income & Adjusted ROE

(1) Q1 percentages have been annualized.

($ in thousands)

Q1 2020 Q1 2019 Net Income $ 38,072 $ 44,965 Adjustments: Unrealized foreign exchange gain (95) (172) Deferred income taxes 5,181 2,472 Fair value changes on undesignated derivatives 481 (112) Adjusted Net Income $ 43,639 $ 47,153 Average Shareholders' Equity $ 884,257 $ 720,007 Adjusted ROE(1) 19.7% 26.2%

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Adjusted SG&A

($ in thousands)

Q1 2020 Q1 2019 Selling, General & Administrative $ 7,664 $ 8,722 Adjustments: Unrealized foreign exchange gain 95 172 Adjusted Selling, General & Administrative $ 7,759 $ 8,894 Total Revenues $ 121,555 $ 134,703 Adjusted SG&A as a % of Total Revenues 6.4% 6.6%

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Net Spread

($ in thousands)

Q1 2020 Q1 2019 Operating lease revenue $ 87,440 $ 105,252 Finance lease revenue 145 160 Lease Income $ 87,585 $ 105,412 Less: End of lease income 2,427 1,564 Interest expense 27,155 38,179 Net interest margin $ 58,003 $ 65,669 Average fleet net book value $ 3,087,480 $ 3,667,774 Net Spread(1) 7.5% 7.2%

24 (1) Net Spread is operating lease revenue plus finance lease revenue, less end of lease income and interest expense, annualized for quarterly periods, divided by average fleet net book value.