LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of liquidity currently are cash on hand, cash generated by our aircraft leasing operations, loans
secured by new aircraft we acquire and unsecured borrowings. Our business is very capital intensive, requiring
significant investments in order to expand our fleet during periods of growth and investments in maintenance and
improvements on our existing portfolio. Our business also generates a significant amount of cash from operations,
primarily from lease rentals and maintenance collections. These sources have historically provided liquidity for these
investments and for other uses, including the payment of dividends to our shareholders. In the past, we have also met
our liquidity and capital resource needs by utilizing several sources, including:
•
lines of credit, our securitizations, term financings, secured borrowings supported by export credit agencies for new
aircraft acquisitions and bank financings secured by aircraft purchases;
•
unsecured indebtedness, including an unsecured revolving credit facility and unsecured senior notes;
•
public offerings of common shares; and
•
asset sales.
Going forward, we expect to continue to seek liquidity from these sources subject to pricing and conditions that we consider
satisfactory. In addition, we have a $50.0 million senior unsecured revolving credit facility with Citigroup Global Markets
Inc., which has a three-year term scheduled to expire in September 2013; we have not yet drawn down on this facility.
During the fourth quarter of 2011, we secured financing in the form of bank term loans in the aggregate amount of
$126.0 million in connection with the purchase of a Boeing Model 777-300ER aircraft and two MD-11F freighter
aircraft. Also, in December 2011, we issued an additional $150.0 million aggregate principal amount of unsecured
9.75% Senior Notes due 2018 at a premium with 9.00% yield to worst and used the proceeds for general corporate
purposes, including the purchase of aviation assets.
Under the terms of Securitization No. 1 effective June 15, 2011, all cash flows available after expenses and interest
are applied to debt amortization. We expect that debt amortization payments over the next twelve months will be
approximately $45.5 million dollars, excluding debt repayments from asset sales of $5.4 million, as compared to $28.0
million over the twelve months ended December 31, 2011.
Under the terms of Securitization No. 2, effective June 8, 2012 all cash flows available after expenses and interest
will be applied to debt amortization. We expect that debt amortization payments, excluding repayments from asset
sales, over the next twelve months will be approximately $79.8 million, excluding debt repayments from asset sales of
$15.2 million, compared to $41.6 million, excluding debt repayments from asset sales of $64.7 million, made over the
twelve months ended December 31, 2011. Further, for this financing, we recently entered into a forward starting
interest rate swap arrangement to hedge approximately 75% of the expected future debt balance beginning in June 2012
at an average rate of 1.27%, which is approximately 400 basis points lower than the existing swap which expires in
June 2012.
The net book value of our flight equipment held for lease unencumbered by financings has grown to $676.9 million
as of December 31, 2011. We believe the cash flow contribution for this asset base, together with the cash flow
contribution from our delivered New A330 Aircraft and from Term Financing No. 1, will provide sufficient amounts of
cash flow to meet our liquidity needs and near-term growth objectives.
While the financing structures for our securitizations and certain of our term financings include liquidity facilities,
these liquidity facilities are primarily designed to provide short-term liquidity to enable the financing vehicles to remain
current on interest payments during periods when the relevant entities incur substantial unanticipated expenditures.
Because these facilities have priority in the payment waterfall and therefore must be repaid quickly, and because we do
not anticipate being required to draw on these facilities to cover operating expenses, we do not view these liquidity
facilities as an important source of liquidity for us.
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