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FTAI Aviation Ltd. 8-K Report, Material Agreement (Dec 30, 2024)

Filed December 30, 2024For Securities:FTAIFTAIMFTAIN

Summary

FTAI Aviation Ltd. (FTAI) has announced a significant strategic move involving the sale of 46 on-lease Boeing 737NG and Airbus A320ceo aircraft for approximately $549 million. This transaction, expected to close by the end of Q2 2025, marks a shift in how FTAI manages its aircraft portfolio. Concurrently, the company is launching a strategic capital initiative with third-party institutional investors, forming the '2025 Partnership.' This new partnership will serve as the primary vehicle for acquiring on-lease 737NG and A320ceo aircraft moving forward. FTAI will provide aircraft management services to the partnership and will also make a minority investment in it. Furthermore, FTAI's Maintenance, Repair and Exchange (MRE) services are set to become the exclusive provider for CFM56 and V2500 engines owned by the 2025 Partnership, securing a recurring revenue stream. This initiative aims to leverage third-party capital while allowing FTAI to retain operational involvement and service revenue.

Key Highlights

  • 1Sale of 46 on-lease 737NG and A320ceo aircraft for approximately $549 million, with closing expected by the end of Q2 2025.
  • 2Launch of a strategic capital initiative with third-party institutional investors, forming the '2025 Partnership'.
  • 3The 2025 Partnership will be the primary buyer of on-lease 737NG and A320ceo aircraft going forward.
  • 4FTAI will provide aircraft management services to the 2025 Partnership and receive customary compensation.
  • 5FTAI will retain a minority investment in the 2025 Partnership.
  • 6FTAI's Maintenance, Repair and Exchange (MRE) services will exclusively power CFM56 and V2500 engines owned by the 2025 Partnership.
  • 7Entry into an MRE Agreement for CFM56 engines with the 2025 Partnership.

Frequently Asked Questions

The sale of 46 aircraft is expected to generate approximately $549 million in net proceeds, subject to customary closing conditions and a financing condition. This transaction will free up capital and potentially reduce the company's balance sheet exposure to these assets.

The partnership allows FTAI to continue acquiring and managing aircraft by leveraging third-party capital, reducing its own capital outlay. It also creates a new revenue stream through aircraft management services and ensures exclusive business for its MRE segment for the partnership's engines.

FTAI will act as the aircraft manager for the partnership, earning market-based compensation for its services. It will also maintain a minority equity stake in the partnership and provide exclusive MRE services for the partnership's CFM56 and V2500 engines.

The sale is expected to be completed by the end of the second quarter of 2025. Key conditions include customary closing requirements and a financing condition for the buyers.