Operating Segments

9 Months Ended

Sep. 30, 2017

Operating Segments

Operating Segments

9. Operating Segments

The Company operates in two business segments: (i) Leasing and Related Operations which involves acquiring and leasing, primarily pursuant to operating leases, commercial aircraft, aircraft engines and other aircraft equipment and the selective purchase and resale of commercial aircraft engines and other aircraft equipment and (ii) Spare Parts Sales which involves the purchase and resale of after-market engine and airframe parts, whole engines, engine modules and portable aircraft components and leasing of engines destined for disassembly and sale of parts.

The Company evaluates the performance of each of the segments based on profit or loss after general and administrative expenses and inter-company allocation of interest expense. While the Company believes there are synergies between the two business segments, the segments are managed separately because each requires different business strategies.

The following tables present a summary of the operating segments (amounts in thousands):

	Leasing and
For the three months ended September 30, 2017	Related Operations		Spare Parts Sales		Eliminations (1)		Total
Revenue:
Lease rent revenue	$	33,474	$	—	$	—	$	33,474
Maintenance reserve revenue		20,370		—		—		20,370
Spare parts and equipment sales		—		9,294		—		9,294
Gain on sale of leased equipment		174		—		—	s	174
Other revenue		2,538		247		(236)		2,549
Total revenue		56,556		9,541		(236)		65,861
Expenses:
Depreciation and amortization expense		16,056		86		—		16,142
Cost of spare parts and equipment sales		—		6,416		—		6,416
Write-down of equipment		6,226		732		—		6,958
General and administrative		13,387		921		—		14,308
Technical expense		2,605		—		—		2,605
Net finance costs		14,220		—		—		14,220
Total expenses		52,494		8,155		—		60,649
Earnings (loss) from operations	$	4,062	$	1,386	$	(236)	$	5,212
	Leasing and
For the nine months ended September 30, 2017	Related Operations		Spare Parts Sales		Eliminations (1)		Total
Revenue:
Lease rent revenue	$	95,045	$	—	$	—	$	95,045
Maintenance reserve revenue		64,212		—		—		64,212
Spare parts and equipment sales		19,300		21,973		—		41,273
Gain on sale of leased equipment		4,684		—		—		4,684
Other revenue		6,314		697		(572)		6,439
Total revenue		189,555		22,670		(572)		211,653
Expenses:
Depreciation and amortization expense		48,526		260		—		48,786
Cost of spare parts and equipment sales		14,623		14,923		—		29,546
Write-down of equipment		19,668		2,575		—		22,243
General and administrative		38,008		2,566		—		40,574
Technical expense		7,345		—		—		7,345
Net finance costs		36,398		—		—		36,398
Total expenses		164,568		20,324		—		184,892
Earnings (loss) from operations	$	24,987	$	2,346	$	(572)	$	26,761
	Leasing and
For the three months ended September 30, 2016	Related Operations		Spare Parts Sales		Eliminations (1)		Total
Revenue:
Lease rent revenue	$	31,270	$	—	$	—	$	31,270
Maintenance reserve revenue		14,229		—		—		14,229
Spare parts sales		900		3,260		—		4,160
Gain on sale of leased equipment		180		—		—		180
Other revenue		1,487		786		(651)		1,622
Total revenue		48,066		4,046		(651)		51,461
Expenses:
Depreciation and amortization expense		16,541		87		—		16,628
Cost of spare parts and equipment sales		640		2,426		—		3,066
Write-down of equipment		—		—		—		—
General and administrative		11,500		757		—		12,257
Technical expense		—		—				—
Net finance costs		10,116		114		—		10,230
Other expense		2,934		475		—		3,409
Total expenses		41,731		3,859		—		45,590
Earnings from operations	$	6,335	$	187	$	(651)	$	5,871
	Leasing and
For the nine months ended September 30, 2016	Related Operations		Spare Parts Sales		Eliminations (1)		Total
Revenue:
Lease rent revenue	$	88,727	$	—	$	—	$	88,727
Maintenance reserve revenue		45,562		—		—		45,562
Spare parts sales		1,800		8,665		—		10,465
Gain on sale of leased equipment		3,430		—		—		3,430
Other revenue		3,392		1,734		(1,512)		3,614
Total revenue		142,911		10,399		(1,512)		151,798
Expenses:
Depreciation and amortization expense		48,981		254		—		49,235
Cost of spare parts sales		1,288		6,497		—		7,785
Write-down of equipment		—		—		—		—
General and administrative		32,438		2,256		—		34,694
Technical expense		—		—		—		—
Net finance costs		30,443		329				30,772
Other expense		10,362		475		—		10,837
Total expenses		123,512		9,811		—		133,323
Earnings from operations	$	19,399	$	588	$	(1,512)	$	18,475
(1) Represents revenue generated between our operating segments
Total assets as of September 30, 2017	$	1,417,166	$	18,733	$	—	$	1,435,899
Total assets as of December 31, 2016	$	1,307,460	$	30,427	$	—	$	1,337,887