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WILLIS LEASE FINANCE CORP

WLFC
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Business Summary

Willis Lease Finance Corporation operates in the commercial aviation aftermarket, specifically the leasing and servicing of commercial aircraft and aircraft engines. The industry is driven by two fundamental growth drivers: the number of commercial aircraft and engines in the market, and the proportion of engines that are leased rather than owned by operators. Boeing projects 3.1% annual growth in the global commercial jet fleet, increasing the current fleet to 49,640 aircraft by 2044 . The Company believes the percentage of leased engines is likely to increase as engine leasing follows the historical growth of aircraft leasing due to the increasing cost of newer engines and the emergence of new niche-focused airlines.

The Company faces intense competition from a number of sources, including aircraft engine and aircraft parts manufacturers, aircraft and aircraft engine lessors, airline and aircraft service and repair companies, and spare parts distributors. Primary competitors named in the filing include AerCap Holdings N.V., Shannon Engine Support Ltd., Pratt & Whitney, Rolls-Royce Partners Finance, Engine Lease Finance Corporation, FTAI Aviation LTD., MTU Aero Engines Holding AG, SMBC Aero Engine Lease B.V., and StandardAero, Inc. The Company distinguishes itself by emphasizing the quality of its portfolio of aircraft engines, supply reliability, and high level of customer service, and has developed an engine pooling arrangement that allows pool members quick access to available spare aircraft engines.

The Company generates revenue primarily through leasing commercial aircraft and aircraft engines under triple-net operating leases, where the lessee is responsible for full lease payments and all expenses associated with use, including maintenance, insurance, and taxes. Revenue is also generated from maintenance reserve revenues, spare parts and equipment sales, interest revenue, gains on sale of leased equipment and financial assets, maintenance services revenue, and other revenue including management fees. Total revenues from the Leasing and Related Operations reportable segment were 94.9% and 95.4% of total consolidated revenue for the years ended December 31, 2025 and 2024, respectively .

The Company's Leasing and Related Operations segment focuses on acquiring and leasing commercial aircraft and aircraft engines. As of December 31, 2025, the Company had $2,801.7 million of equipment held in its operating lease portfolio, $139.9 million of notes receivable, $30.6 million of maintenance rights, and $16.6 million of investments in sales-type leases, representing 363 engines, 20 aircraft, one marine vessel and other leased parts and equipment with 69 lessees in 37 countries . The engine portfolio primarily consists of noise-compliant Stage IV commercial jet engines manufactured by CFMI, General Electric, Pratt & Whitney, Rolls Royce, and International Aero Engines. As of December 31, 2025, approximately 64.8% of on-lease equipment by net book value is leased and operated internationally . The Company also manages 116 engines and related equipment for third parties .

The Spare Parts Sales segment, managed by wholly-owned subsidiary Willis Aeronautical Services, Inc., primarily engages in the sale of aircraft engine parts and materials through the acquisition or consignment of aircraft and engines. As of December 31, 2025, spare parts inventory had a carrying value of $56.6 million . This segment enables the Company to provide end-of-life solutions for surplus aircraft and engines, manage the full life cycle of lease assets, and enhance returns on the engine portfolio.

During 2025, the Company closed several significant capital events. The Company and its subsidiary WEST VIII closed an offering of $596.0 million in aggregate principal amount of fixed rate notes . The Company and its subsidiary WEST IX closed an offering of $392.9 million in aggregate principal amount of fixed rate notes . The Company paid off both its WEST IV Series A and Series B 2018 term notes payable. In December 2025, the Company entered into a new investment fund partnership with Liberty Mutual Investments to invest up to $600 million in loan and loan-like engine financings . The Company also entered into a new investment fund partnership with Blackstone Credit & Insurance to invest in current and next generation aircraft engines, with plans to deploy over $1 billion into target asset types . The Company entered into a joint venture with Global Engine Maintenance to build an engine test facility, holding a 70% membership interest . The Company sold the entire issued share capital of Bridgend Asset Management Limited to WMES for a total purchase price of $45.0 million, resulting in a gain on sale of business of approximately $43.0 million . The Company also repurchased 30,000 shares of common stock from its Executive Chairman at a price of $126.28 per share .

Total revenue for the year ended December 31, 2025 was $730.2 million, compared to $569.2 million for the year ended December 31, 2024, an increase of 28.3% . Net income attributable to common shareholders was $108.1 million for 2025, compared to $104.4 million for 2024 . Diluted earnings per common share was $15.39 for 2025, compared to $15.34 for 2024 . Adjusted EBITDA was approximately $459.1 million for 2025, compared to $393.7 million for 2024 . Net cash provided by operating activities was $283.2 million in 2025 .

Business Outlook

The Company's primary growth vector is the acquisition and leasing of commercial aircraft and aircraft engines. The Company has committed to purchase new engines in 2026 with an aggregate value of up to $244.5 million . The Company is currently committed to purchasing 18 additional new LEAP-1B engines and 28 additional new LEAP-1A engines for an aggregate total of $857.4 million by 2030 . The Company is also committed to purchasing six PW1133 engines for approximately $104.0 million in 2026 . The Company has entered into two new investment fund partnerships, one with Liberty Mutual Investments to invest up to $600 million in loan and loan-like engine financings, and one with Blackstone Credit & Insurance to deploy over $1 billion into current and next generation aircraft engines . The Company also entered into a joint venture with Global Engine Maintenance to build an engine test facility in West Palm Beach, Florida.

The Company's growth is also supported by its access to capital markets. In 2025, the Company closed WEST VIII's offering of $596.0 million in aggregate principal amount of fixed rate notes and WEST IX's offering of $392.9 million in aggregate principal amount of fixed rate notes . The Company's revolving credit facility was expanded to $1.0 billion in October 2024, and as of December 31, 2025, $350.0 million was available under this facility . The senior secured warehouse credit facility for WWFL was amended in July 2025 to extend the availability period to May 2027 and the final repayment date to May 2030, and as of December 31, 2025, $417.3 million was available under this facility .The Company's operational outlook includes continued investment in its lease portfolio. Cash flows used in investing activities were $256.4 million for the year ended December 31, 2025, primarily reflecting $524.6 million for the purchase of equipment held for operating lease and $31.1 million for the purchase of property, equipment and furnishings . The Company also continues to invest in its workforce, employing 475 employees worldwide as of December 31, 2025 .

The Company's capital allocation strategy includes accessing the ABS and other markets to establish term fixed rate debt financing. The Company paid $8.7 million in dividends to common shareholders during the year ended December 31, 2025 . The Company has a common stock repurchase plan approved in December 2024 allowing for repurchases of up to $60.0 million of the Company's common stock, extended through December 31, 2026 . At December 31, 2025, approximately $39.6 million was available to purchase shares under the plan . The Company also paid $5.7 million in preferred stock dividends during 2025 .

The Company faces structural headwinds including the risk that the value and lease rates of its engines and aircraft could decline, particularly as host aircraft are retired from service. As of December 31, 2025, engines on-lease with lease terms of 12 months or less and engines off-lease constituted approximately 50% of the Company's assets . The Company is also exposed to interest rate risk, with $732.7 million of its borrowings on a variable rate basis at rates tied to one-month term SOFR as of December 31, 2025 . One-month term SOFR was approximately 3.87% and 4.37% on December 31, 2025 and 2024, respectively . The Company estimates that for every 1% increase or decrease in interest rate, the annual interest expense for its variable rate debt would increase or decrease $4.0 million .

Geographic and regulatory constraints are significant. For the year ended December 31, 2025, approximately 69% of the Company's lease rent revenue was generated by leases to foreign customers . The largest portion of foreign lease revenues comes from the Asia-Pacific and European regions. The Company is subject to risks from foreign laws that may not be as protective of lessor rights as those in the U.S., and changes in trade policy, tariffs, sanctions, and import/export regulations could have a material adverse effect on the business.

Risk Factors

The Company is exposed to significant credit risk from its customers, with an aggregate of approximately $3.8 million in lease rent and $3.3 million in maintenance reserve payments more than 30 days past due as of December 31, 2025 . Customer concentration is a material risk, as one customer accounted for approximately 13% of total lease rent revenue in 2025 and 15% of total receivables as of December 31, 2025 . The Company's high level of indebtedness, totaling $2.7 billion as of December 31, 2025, with $732.7 million at variable rates, creates significant interest rate exposure; a 1% increase in interest rates would increase annual interest expense by $4.0 million . The value of the Company's engine portfolio is heavily dependent on the status of host aircraft, and engines on-lease with lease terms of 12 months or less and off-lease engines constituted approximately 50% of assets as of December 31, 2025, increasing remarketing risk . The Company also faces risks related to its foreign operations, as approximately 69% of lease rent revenue comes from foreign customers, subjecting it to divergent regulatory requirements and currency devaluation risks .

Management Priorities

Management's message emphasizes the Company's position as a leading lessor and servicer of commercial aircraft and aircraft engines, with a principal business objective of building value for shareholders by acquiring and managing assets to provide a return on investment through lease rent, maintenance reserve revenues, and management fees. The strategic priorities emphasized include expanding the lease portfolio through acquisitions and new financing vehicles, as evidenced by the 2025 closings of WEST VIII and WEST IX offerings totaling $988.9 million in fixed rate notes, and the formation of two new investment fund partnerships with Liberty Mutual Investments and Blackstone Credit & Insurance to deploy significant capital into engine financings . Management also highlights the vertical integration of Willis Aero for spare parts sales and the joint ventures with Mitsui & Co. and CASC to access international markets. The tone is forward-looking, focusing on growth through capital markets access and strategic partnerships, while acknowledging risks related to interest rates, customer concentration, and the global economic environment.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Industry
  2. [2] Item 1, Business — Leasing and Related Operations
  3. [3] Item 1, Business — Leasing and Related Operations
  4. [4] Item 1, Business — Introduction
  5. [5] Item 1, Business — Introduction
  6. [6] Item 1, Business — Introduction
  7. [7] Item 1, Business — Introduction
  8. [8] Item 1, Business — Engine Leasing
  9. [9] Item 1, Business — Engine Leasing
  10. [10] Item 1, Business — Introduction
  11. [11] Item 1, Business — Leasing and Related Operations
  12. [12] Item 1, Business — Introduction
  13. [13] Item 1, Business — Spare Parts Sales
  14. [14] Item 1, Business — Financing/Source of Funds
  15. [15] Item 1, Business — Financing/Source of Funds
  16. [16] Item 1, Business — Investment Fund Partnerships
  17. [17] Item 1, Business — Investment Fund Partnerships
  18. [18] Item 1, Business — Engine Leasing
  19. [19] Item 7, MD&A — Results of Operations
  20. [20] Item 7, MD&A — Results of Operations
  21. [21] Item 5, Market for Registrant's Common Equity
  22. [22] Item 7, MD&A — Results of Operations
  23. [23] Item 7, MD&A — Results of Operations
  24. [24] Item 7, MD&A — Non-GAAP Financial Measures
  25. [25] Item 7, MD&A — Non-GAAP Financial Measures
  26. [26] Item 8, Financial Statements — Consolidated Statements of Income
  27. [27] Item 8, Financial Statements — Consolidated Statements of Income
  28. [28] Item 7, MD&A — Non-GAAP Financial Measures
  29. [29] Item 7, MD&A — Non-GAAP Financial Measures
  30. [30] Item 7, MD&A — Financial Position, Liquidity and Capital Resources
  31. [31] Item 1A, Risk Factors — Risks Related to Our Orders of New Engines
  32. [32] Item 7, MD&A — Contractual Obligations and Commitments
  33. [33] Item 7, MD&A — Contractual Obligations and Commitments
  34. [34] Item 1, Business — Investment Fund Partnerships
  35. [35] Item 1, Business — Investment Fund Partnerships
  36. [36] Item 7, MD&A — Debt Obligations and Covenant Compliance
  37. [37] Item 7, MD&A — Debt Obligations and Covenant Compliance
  38. [38] Item 7, MD&A — Debt Obligations and Covenant Compliance
  39. [39] Item 7, MD&A — Debt Obligations and Covenant Compliance
  40. [40] Item 7, MD&A — Debt Obligations and Covenant Compliance
  41. [41] Item 7, MD&A — Debt Obligations and Covenant Compliance
  42. [42] Item 7, MD&A — Cash Flows Discussion
  43. [43] Item 7, MD&A — Cash Flows Discussion
  44. [44] Item 7, MD&A — Cash Flows Discussion
  45. [45] Item 1, Business — Human Capital Management
  46. [46] Item 5, Market for Registrant's Common Equity
  47. [47] Item 5, Market for Registrant's Common Equity
  48. [48] Item 5, Market for Registrant's Common Equity
  49. [49] Item 7, MD&A — Preferred Stock Dividends
  50. [50] Item 1A, Risk Factors — Risks Related to Our Aviation Assets
  51. [51] Item 7, MD&A — Management of Interest Rate Exposure
  52. [52] Item 1A, Risk Factors — Risks Related to Our Capital Structure
  53. [53] Item 1A, Risk Factors — Risks Related to Our Capital Structure
  54. [54] Item 7A, Quantitative and Qualitative Disclosures About Market Risk
  55. [55] Item 1A, Risk Factors — Risks Related to Our Foreign Operations
  56. [56] Item 1A, Risk Factors — Risks Related to Our Business
  57. [57] Item 1A, Risk Factors — Risks Related to Our Business
  58. [58] Item 1A, Risk Factors — Risks Related to Our Competition and Corporate Structure
  59. [59] Item 1, Business — Engine Leasing
  60. [60] Item 1A, Risk Factors — Risks Related to Our Capital Structure
  61. [61] Item 7, MD&A — Management of Interest Rate Exposure
  62. [62] Item 7A, Quantitative and Qualitative Disclosures About Market Risk
  63. [63] Item 1A, Risk Factors — Risks Related to Our Aviation Assets
  64. [64] Item 1A, Risk Factors — Risks Related to Our Foreign Operations
  65. [65] Item 1, Business — Financing/Source of Funds
  66. [66] Item 1, Business — Financing/Source of Funds
  67. [67] Item 1, Business — Investment Fund Partnerships
  68. [68] Item 1, Business — Investment Fund Partnerships
  69. [69] Item 8, Financial Statements — Consolidated Statements of Income
  70. [70] Item 8, Financial Statements — Consolidated Statements of Income
  71. [71] Item 8, Financial Statements — Consolidated Statements of Income
  72. [72] Item 8, Financial Statements — Consolidated Statements of Income
  73. [73] Item 8, Financial Statements — Consolidated Statements of Income
  74. [74] Item 8, Financial Statements — Consolidated Statements of Income
  75. [75] Item 8, Financial Statements — Consolidated Statements of Income
  76. [76] Item 8, Financial Statements — Consolidated Statements of Income
  77. [77] Item 7, MD&A — Results of Operations
  78. [78] Item 7, MD&A — Results of Operations
  79. [79] Item 7, MD&A — Results of Operations
  80. [80] Item 7, MD&A — Results of Operations
  81. [81] Item 8, Financial Statements — Consolidated Statements of Income
  82. [82] Item 8, Financial Statements — Consolidated Statements of Income
  83. [83] Item 7, MD&A — Results of Operations
  84. [84] Item 7, MD&A — Results of Operations
  85. [85] Item 8, Financial Statements — Consolidated Statements of Income
  86. [86] Item 8, Financial Statements — Consolidated Statements of Income
  87. [87] Item 7, MD&A — Results of Operations
  88. [88] Item 7, MD&A — Results of Operations
  89. [89] Item 7, MD&A — Non-GAAP Financial Measures
  90. [90] Item 7, MD&A — Non-GAAP Financial Measures
  91. [91] Item 7, MD&A — Financial Position, Liquidity and Capital Resources
  92. [92] Item 7, MD&A — Debt Obligations and Covenant Compliance
  93. [93] Item 1, Business — Leasing and Related Operations
  94. [94] Item 7, MD&A — Results of Operations
  95. [95] Item 7, MD&A — Results of Operations

Analysis on 6/9/2026