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DAE announces Q1 2020 financial results

Dubai Aerospace Enterprise (DAE) Ltd. reported its financial results for the three months ended 31 March 2020. The consolidated financial statements can be found here.

Highlights included:

  • Total Revenue: US$344.2 million (Q1 2019: US$360.0 million)
  • Net Income: US$76.7 million (Q1 2019: US$99.0 million)
  • Pre-Tax Profit Margin: 24% (Q1 2019: 30%)
  • Pre-Tax Return on Equity: 10.9% (Q1 2019: 12.8%)
  • Net Debt-to-Equity: 2.60x (Year-end 2019: 2.64x)
  • Unsecured Debt as a percentage of Total Debt: 61% (Year-end 2019: 62%)
  • Available Liquidity: US$2,816 million (Year-end 2019: US$2,404 million)
  • Unencumbered Assets: US$6.6 billion (March 2019: US$5.8 billion)
  • Fleet Utilization: 99.8% (March 2019: 99.6%)

Commenting on the financial results for this quarter, Firoz Tarapore, Chief Executive Officer of DAE, said: “Overall, Q1 2020 was characterized by stronger liquidity, unchanged capital adequacy and reduced profitability. Revenue and Net Income in Q1 2020 were lower attributable primarily to approximately 20 fewer aircraft in the Owned Aircraft portfolio resulting from asset sales in 2019, and timing of gain on sales of aircraft. We have not yet seen a meaningful increase in provisions related to the impact on our customers from this pandemic; we expect this to change in Q2 and Q3 2020. We have seen an increase in arrears as customers with liquidity constraints fall behind in meeting their obligations.

“During the quarter, we:

  • received full and early prepayment of the shareholder receivable of approximately US$814 million,
  • repurchased US$169 million of bonds; our current remaining authorization is approximately US$245 million, and
  • repurchased US$250 million of shares while maintaining our capital adequacy and liquidity metrics

“Our liquidity strengthened during Q1 2020. As of April 30, 2020, our available liquidity was in excess of US$2.8 billion, comprising of US$577 million of unrestricted cash balance and US$2.2 billion of available committed lines of credit. 73% of our total committed lines of credit are undrawn. We do not need to take any incremental liquidity actions to provide additional assistance to our clients, fund the growth of Trade Receivables and meet all of our other liquidity requirements

“As of April 30, 2020, we have granted rent deferral requests from 25 customers; the aggregate rent deferred for these customers totals 5% of annual reported revenue. In addition, we are currently evaluating rent deferral requests from 33 customers; the aggregate rent deferral requests from these customers totals 10% of annual reported revenue.

“Our approach to assisting customers through this crisis has been to seek solutions that create value for both the airline and DAE. We will continue with this philosophy as we look to protect and enhance the value of our franchise and that of our customers. As we provide additional assistance to our clients who find themselves in extraordinary times, we expect the deferral amounts as a percentage of Annual Reported Revenue to increase.

“All three of our investment grade ratings were affirmed since the start of the pandemic, reflecting our strong liquidity position, modest liquidity requirements, disciplined financial management and a leading market position.

“Our Business Continuity Plan has held us in good stead from the beginning of the pandemic. We deploy a fully integrated suite of data and video communication products from Microsoft. Today, 90% of our team members are contributing near seamlessly from remote locations and are delivering our platform capabilities to our customers with no visible lag. This investment in technology has empowered us significantly during this time of disruption.”, Tarapore concluded.

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