FTAIM — FTAI Aviation Ltd.

FTAI Aviation Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Q4 Adjusted EBITDA: $277.2 million, up 10% from $252 million in Q4 2024.
• Aerospace Products Segment: Generated $195 million of EBITDA at a 35% margin, a 66% increase year-over-year.
• Full Year Adjusted EBITDA: $1.2 billion, a 38% increase from $862 million in 2024.
• Aviation Leasing Segment: Contributed $609 million in EBITDA for 2025, slightly above the target of $600 million.
• Free Cash Flow: Generated $724 million in 2025, exceeding the revised guidance of $750 million.
• Leverage Ratio: Ended the year at 2.6x, within the targeted range of 2.5 to 3x.

2. Strategic Updates and Business Highlights

• Strategic Capital Initiative (SCI): Launched SCI I, raising $2 billion in equity commitments, with a total target of $6 billion. Closed on 130 aircraft in 2025.
• Aerospace Products Growth: Increased production of CFM56 modules to 228 in Q4, surpassing the annual target of 750.
• FTAI Power Launch: Announced a new platform for converting CFM56 engines into aero-derivative power turbines, targeting 100 units by 2027.
• Partnership with CFM: Secured a multiyear agreement for parts supply and repairs, enhancing operational capabilities and cost efficiency.

3. Forward Guidance and Outlook

• 2026 EBITDA Guidance: Updated to $1.625 billion, up from $1.525 billion, with $1.05 billion from Aerospace Products and $575 million from Aviation Leasing.
• Free Cash Flow for 2026: Expected to be approximately $915 million, factoring in increased investments in SCI II and FTAI Power.
• Production Targets: Increased target for Aerospace Products from 1,000 to 1,050 modules in 2026.

4. Bad News, Challenges, or Points of Concern

• Employee Costs: Increased headcount led to a slight lag in productivity, impacting Q4 EBITDA.
• Customer Delivery Timing: Some engine deliveries shifted from Q4 2025 to Q1 2026, affecting quarterly results.
• Market Competition: Although demand for CFM56 and V2500 engines remains strong, the competitive landscape is evolving, necessitating continued innovation and efficiency improvements.

5. Notable Q&A Insights

• Aerospace Products Margins: Management expressed confidence in reaching a 40% margin in 2026, supported by improved access to lower-cost parts and expanded repair capabilities.
• Sourcing Environment: The company is well-positioned to source the necessary engines and components for both SCI and Power initiatives, with a focus on high shop visit intensity assets.
• Customer Demand for FTAI Power: While specific orders for Mod-1 were not disclosed, management indicated strong interest from hyperscalers and data center operators, emphasizing the importance of long-term contracts.
• Hiring Strategy: The company plans to continue hiring to support growth, particularly in the aerospace and power sectors, leveraging its training academy to develop talent.

Overall, FTAI Aviation demonstrated strong financial performance in Q4 2025 and throughout the year, with significant strategic initiatives underway to support future growth. However, challenges related to productivity and customer delivery timing were noted, along with the need to navigate a competitive market landscape.