DAE profits slide as costs increase

Company had a fleet of 358 aircraft on September 30, 301 of which are owned and 51 are managed

Moody's changed its outlook of plane lessor Dubai Aerospace Enterprise to stable from 'rating under review'. Courtesy of DAE

Dubai Aerospace Enterprise (DAE), the Middle East’s biggest plane lessor, posted a 10 per cent drop in nine-month profit as depreciation expenses and finance costs grew.

The state-owned lessor earned $260.5 million in the nine months ending September 30, down from $290.5m in the same period a year ago, it said in a statement on Thursday.

Nine-month revenue edged up 1.2 per cent to $1.7 billion year-on-year, DAE said, but depreciation costs increased by $11.8m and net finance costs were $35m higher at $280.5m.

DAE in September said it received a mandate to acquire and manage aircraft worth about $1.4 billion (Dh5.14bn). The multi-year mandate from an investor, one of the world’s largest fund managers, will target narrowbody and widebody jets that DAE will source through its secondary market trading and sale-leaseback channels.

As of September 30, DAE had a total fleet of 358 aircraft, made up of 301 owned aircraft and 51 managed planes. It also has six new, fuel-efficient aircraft on order from Airbus and Boeing, which are due to deliver throughout 2019 and 2020. These aircraft are on lease to 111 customers in 56 countries.

DAE's aggregate book value of owned fleet reached $11.9bn as of Sept 30.

"Our lease portfolio is highly diversified, geographically and by airline, with our top five lessees representing 28.6 per cent of our portfolio based on lease revenue as of 30 September, 2019," it said.

Dubai-based Emirates airline is DAE's largest customer contributing 14.1 per cent of lease revenue during the nine months ended Sept 30.

DAE's third quarter profit also fell to $63.4m from $95.2m in the same quarter a year ago, as revenue slipped to $343.5m, from $357.8m in the prior-year period.