FTAI Aviation (FTAI) Reports
FTAI Aviation (FTAI) reported after the close yesterday and held its earnings conference call this morning. I came away from the call feeling bullish about the company’s prospects, in part because of the level of detail management provided in its earnings presentation slides.
One of those slides showed how there are three modules within each of the company’s target engines (the CFM56 engine was used in the example). Since each of these modules has a different lifespan and can be moved between different engine assemblies, growth in module inventory drives exponential growth in the number of module combinations that FTAI can offer its customers.
For example, 10 engines equals 30 modules (three per engine), which equals 1,000 combinations (10 cubed). At 456 engines (which FTAI currently has), it has almost 95 million combinations of the three modules.
This dynamic helps explain how FTAI can service customers so well and keep their planes in the air, even when one of an engine’s three modules has reached the end of its life.
Also helpful was management’s slide clarifying that it is focused on the small and medium-sized airlines, of which there are about 607, with roughly 19,300 engines in total. Its target market is not the five large airlines that have a total of about 5,000 engines and their own maintenance and repair operations.
Back to the quarterly report, FTAI reported revenue growth of 19.6% to $597 million and adjusted EPS growth of 111% to $1.12. Management reiterated 2025 guidance for Adjusted EBITDA of $1.1 to $1.15 billion and increased guidance for 2026 Adjusted EBITDA to $1.4 billion from $1.25 billion. The company also announced it would expand its maintenance capacity in Europe by acquiring a 50% ownership stake in IAG Engine Center Europe, an Italian company with a 200,000-square-foot engine maintenance repair and overhaul facility in Rome.
The stock has pulled back a little today, which does not concern me (back to Tuesday’s level). FTAI’s recovery from the January drawdown remains very much intact.
In a different market, I would move FTAI back to buy today, but in the current market, keeping at hold and watching. HOLD HALF
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