Second Quarter 2020 Earnings August 13, 2020 Forward-Looking - - PowerPoint PPT Presentation

Second Quarter 2020 Earnings

August 13, 2020

Forward-Looking Statements

2

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 June 30, 2020 except as otherwise noted. Any 2020 year-to-date data is as of August 12, 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. Rent collections as a percentage of rent due in the quarter ended June 30, 2020, are calculated as (i) the sum of cash collected from operating and

finance lease rentals for the quarter as a percentage of (ii) the total operating and finance lease rentals expected to be collected during the period after giving effect to lease deferral arrangements made or expected to be made as of August 12, 2020.

• 4. 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 August 13, 2020.

• 5. 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

COVID Update Continued Severe Impact on Global Aviation

−Reductions in traffic, operations, profitability and liquidity −Sharp reductions in aircraft production −Expectation that COVID-19 impact will linger for several years

4

Progress Towards Recovery

− Significant government support for airlines worldwide − Increase in domestic traffic in many major markets(1) − China traffic returning towards normal(1)

(1) IATA data as of July 2020

FLY’s Robust Business Model Robust Business Model

− Most popular aircraft types, primarily narrowbody − Good weighting of financially sound lessees − Strong balance sheet − Long-dated financing − No aircraft order commitments

5

Situation Report

− Collected 84% of rent due in Q2 − Two aircraft returned early since March − Four extensions and two new leases since March − Five aircraft representing 3% of NBV to remarket in 2020 − Market open for selected aircraft sales

6

Active Management and Experienced Manager Experienced BBAM team

−Third-largest aircraft lease manager −Long-term manager with 30+ years experience −Seasoned team managed through several industry crises −Full-service global platform with longstanding relationships −BBAM shareholders own 23% of FLY shares

Active Management

−Focusing on enhancing liquidity −Managing rent deferral requests −Maintaining asset values −Sustaining industry relationships

Deferral Process Working Closely with Airline Customers

−Broad range of requests reflecting variety of airline responses to crisis −Lessees representing 65% of the fleet are receiving at least partial deferral of their rent −Average deferral period of seven months; Majority to be repaid by end of 2021

7

8

Second Quarter Highlights

$80M

TOTAL REVENUES

$11M

ADJUSTED NET INCOME

$0.37

ADJUSTED EPS

$29.46

BOOK VALUE PER SHARE

9

Strong Financial Position

$352 $286 $289

$288 $639 $598

Q2 2019 Q4 2019 Q2 2020 Unrestricted Cash Unencumbered Assets

$640 UNRESTRICTED CASH AND UNENCUMBERED ASSETS

(in millions)

3.1x 2.3x 2.1x

Q2 2019 Q4 2019 Q2 2020

NET DEBT TO EQUITY $887 $925

2.1x

NET DEBT TO EQUITY ALL-TIME LOW LEVERAGE

$887M

UNRESTRICTED CASH + UNENCUMBERED ASSETS CASH & UNTAPPED RESOURCES

10

Proven

TRACK RECORD OF DIVERSIFIED FINANCING SOURCES

No

NEAR-TERM REFINANCING NEEDS

Zero

MANUFACTURER OR CAPEX COMMITMENTS FINANCING FLEXIBILITY NO 2020 ORDERS LONG-TERM DEBT

FLY is Well Positioned

Julie Ruehl

CFO

Q2 Financial Highlights

12

($ in millions, except EPS)

Q2 2020 Q2 2019

Net Income $9.6 $54.1 Earnings Per Share $0.32 $1.68 Net Spread(1) 7.1% 7.5%

(1) See appendix for definition of Net Spread.

$54.1

$45M EOL and Gain on Sale in Q2 2019

Revenue Comparison

13

(in millions)

Q2 2020 Q2 2019 Operating Lease Rental Revenue $79.8 $101.1 End of Lease Income 0.2 28.8 Amortization of Lease Incentives and Other (1.0) (1.3) Operating Lease Revenue $79.1 $128.6 Finance Lease Income 0.1 0.2 Gain on Sale of Aircraft – 16.1 Other Income 0.7 2.2 Total Revenue $80.0 $147.0

Note: Sums may not foot due torounding.

$79.8

41 aircraft sold from Q1 2019 to Q2 2020

(in millions)

Q2 2020 Q2 2019 Depreciation $32.0 $37.3 Interest Expense 25.3 35.4 Selling, General and Administrative 7.1 9.4 Provision for Uncollectible Operating Lease Receivables 2.0 – Loss on Derivatives 0.1 0.3 Fair Value Loss on Marketable Securities 1.1 – Loss on Extinguishment of Debt – 1.5 Maintenance and Other Costs 1.0 1.6 Total Expenses $68.5 $85.6

Note: Sums may not foot due torounding.

Expense Comparison

14

Decreased leverage and lower cost of debt

25.3

Rent Deferral Summary

15

Deferral and Repayment Profile

(in millions)

Rent Deferrals Deferral Repayments(1) Through Q2 2020 39 – Q3 2020 21 7 Q4 2020 12 7 Year ending December 31, 2021 11 37 Thereafter – 32 Total 83 83 $ $ $ $

(1) Does not include interest component of repayments.

− Collected 84% of rent due in Q2, taking deferrals into account − Collected 47% of pre-deferral contracted rent in Q2 − Approximately $40M of deferrals included in rent receivables as of June 30 − Estimated deferrals of $30-35M, or 20% of revenue, in the 2nd half of 2020

16

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

$289M Unrestricted Cash + $598M Unencumbered Assets

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 86 Modern Aircraft

18

4.9

YEARS AVG. LEASE TERM

8.0

YEARS AVG. AGE

40

Note: Percentages represent weighted average net book value.

28%

NBV

14% 10% <1%

2

3% 37%

NBV

CFM ENGINES

Leased Separately

7 1

2% 6%

Diversified Customer Base

41 Airlines in 25 Countries Geographic Diversity

Malaysia 18% Ind ndia 16% Eth thiopia 10% Phil hilippines 9% 9% Ind ndonesia 7% 7% Chin hina 6% 6% Sp Spain 5% 5% France 3% 3% USA USA 3% 3% Oth ther 23%

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

AirAsi sia Berhad 11% Air Ind ndia 11% Eth thiopian Airlines 10% Phil hilippine Airlines 8% % Malaysia Airlines 7% 7% Air Euro uropa 4% 4% Transavia 3% 3% Li Lion Air 3% 3% Thai hai AirAsi sia 3% 3% Sp SpiceJet 2% 2%

(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) June 30, 2020 December 31, 2019 Unrestricted cash and cash equivalents $289 $286 Unencumbered assets $598 $639 O /S Rate(1) O /S Rate(1) Maturity Term Loan 374 3.44% $385 4.15% 2025 Nord LB Facility 63 2.03% 65 3.59% 2021 Other Bank DebtFacilities 578 3.49% 674 4.07% 2020-2028 Magellan Acquisition Facility 265 3.95% 279 4.11% 2025 Fly Aladdin Acquisition Facility 241 4.83% 272 4.85% 2023 Fly Aladdin Engine Funding Facility 42 4.95% 42 4.95% 2021-2022 Unamortized Discounts and LoanCosts (18) (22) Total Secured Debt $1,545 3.74% $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 LoanCosts (5) (6) Total UnsecuredDebt $620 5.84% $619 5.84% Total Debt 2,165 4.34% 2,315 4.65% Shareholders' Equity 898 878 TotalCapitalization $3,063 $3,192 Debt to Equity Net Debt to Equity(2) Secured Debt to TotalDebt 2.4x 2.1x 71% 2.6x 2.3x 73% Total Debt to TotalCapitalization 71% 72%

20

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

5 10 18

Percentage of NBV

3% 7% 13%

Adjusted Net Income & Adjusted ROE

(1) Q2 percentages have been annualized.

($ in thousands)

Q2 2020 Q2 2019 Net Income $ 9,606 $ 54,050 Adjustments: Unrealized foreign exchange loss 56 68 Deferred income taxes 1,582 7,519 Fair value changes on undesignated derivatives 13 255 Adjusted Net Income $ 11,257 $ 61,892 Average Shareholders' Equity $ 894,172 $ 745,783 Adjusted ROE(1) 5.0% 33.2%

22

Net Spread

($ in thousands)

Q2 2020 Q2 2019 Operating lease revenue $ 79,117 $ 128,623 Finance lease revenue 141 156 Lease Income $ 79,258 $ 128,779 Less: End of lease income 227 28,823 Interest expense 25,284 35,439 Net interest margin $ 53,747 $ 64,517 Average fleet net book value $ 3,018,044 $ 3,454,855 Net Spread(1) 7.1% 7.5%

23 (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.