Dubai plane lessor DAE's half-year profit climbs amid strong demand from airlines

Revenue during six-month period climbed to $670.1m as Covid-era rent deferral agreements are being repaid ahead of schedule

Dubai Aerospace Enterprise said its second-quarter liquidity remained strong. Photo: DAE Capital

Dubai Aerospace Enterprise, one of the world's biggest plane lessors, said profit for the first half of 2023 increased marginally amid robust demand from airlines for aircraft to meet the boom in air travel.

Profit before exceptional items in the six months to the end of June inched up to $141.1 million, compared to $140.1 million during the same period of 2022, the company said on Wednesday.

The exceptional items in 2022 related to an asset write-off of $576.5 million for aircraft operating in the fleet of Russian airlines, over which the plane lessor has no control.

First-half revenue rose 15 per cent year-on-year to $670.1 million because airlines are paying off Covid-era rent deferral agreements earlier than scheduled, DAE said.

“Our first half 2023 results continue to demonstrate the strong demand we are seeing in the market for aircraft from our airline customers. Covid-era deferral programmes are being repaid ahead of schedule and secondary market aircraft valuations remain robust,” said DAE chief executive Firoz Tarapore.

“Our profitability metrics continue to trend towards pre-pandemic levels.”

The growth comes as the industry sees no signs of air travel demand abating on one hand and as plane makers struggle to deal with aircraft delivery delays and ease capacity constraints on the other.

Global air traffic recovered in May to 96.1 per cent of its pre-pandemic levels in the same month of 2019, with Middle East airlines leading the rebound, the International Air Transport Association said in its latest report.

Middle East airlines in May fully recovered their international passenger traffic levels, which reached 17.2 per cent above 2019's performance, the industry body said in July.

In the second quarter, DAE repurchased a further $102 million of principal amount of its bonds, bringing the total to $307 million in the first six months of 2023. It had $368 million of remaining bond repurchase authorisation at the end of the quarter.

“Our liquidity coverage ratio remains exceptionally strong at 281 per cent, and our available liquidity is $2.3 billion,” Mr Tarapore said.

“The resilience of our business model continues to be demonstrated by the strength of our credit quality and funding metrics in the quarter.”

Fitch Ratings revised DAE's outlook to positive from stable during the quarter.