Sumisho Air Lease — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenues decreased 18.3% year-over-year to $592.6 million for the three months ended September 30, 2026, compared to $725.4 million in the prior year period.
• Rental of flight equipment revenue declined 18.2% to $556.7 million, down from $680.9 million in the prior year.
• Gain on aircraft sales, trading, and other income decreased 19.1% to $36.0 million, compared to $44.5 million in the prior year.
• Operating expenses decreased 17.9% to $493.1 million, compared to $600.9 million in the prior year.
• Income before taxes fell 31.5% to $126.8 million, down from $185.0 million in the prior year.
• Net income attributable to common stockholders decreased 31.0% to $93.4 million, compared to $135.4 million in the prior year.
• Adjusted net income before income taxes decreased 14.8% to $123.1 million, compared to $144.5 million in the prior year.
• Pre-tax margin was 21.4%, down from 25.5% in the prior year.
• Adjusted pre-tax margin was 20.8%, up from 19.9% in the prior year.
• Total debt financing, net of discounts and issuance costs, was $19.3 billion as of September 30, 2026, compared to $19.7 billion as of December 31, 2025.
• Composite cost of funds increased to 4.51% as of September 30, 2026, from 4.15% as of December 31, 2025.
• Total liquidity ended the quarter at $4.2 billion, comprising $704.1 million in unrestricted cash and approximately $3.5 billion in undrawn balances under the unsecured revolving credit facility.

Business Segments and Product Lines:

• The company ended the period with 473 aircraft in its owned fleet, comprised of 339 narrowbody and 134 widebody aircraft.
• The company managed 32 aircraft as of September 30, 2026.
• Sold 15 aircraft during the three months ended September 30, 2026, generating $761.9 million in sales proceeds.
• The net book value of flight equipment subject to operating leases decreased to $23.7 billion as of September 30, 2026, from $29.5 billion as of September 30, 2025.
• The weighted average fleet age was 5.0 years, and the weighted average remaining lease term was 6.8 years as of September 30, 2026.
• The customer base included 94 airlines across 51 countries as of September 30, 2026.
• The sales pipeline included approximately $4.3 billion in flight equipment held for sale and $55.3 million in aircraft subject to letters of intent as of September 30, 2026.
• Aircraft depreciation estimates were revised in the third quarter of 2026, reducing depreciation expense by $38.8 million for the period.
• Expected quarterly depreciation expense for the fourth quarter of 2026 is approximately $192 million.
• No aircraft are currently on order; the orderbook was transferred to SMBC AC following the merger in April 2026.

Market and Competitive Landscape:

• Regional concentration of flight equipment subject to operating leases as of September 30, 2026: Europe (39.4%), Asia Pacific (35.9%), Central America, South America, and Mexico (11.2%), U.S. and Canada (7.4%), and The Middle East and Africa (6.1%).
• The company noted it may experience increased competition from other aircraft lessors which could impact its ability to execute its long-term strategy.

Risks and Challenges:

• The company carries a significant amount of indebtedness, requiring a substantial portion of cash flows for debt service.
• Changes in borrowing costs or interest rate increases may adversely affect net income and competitiveness.
• The company no longer has an OEM orderbook following the merger, which may increase re-leasing risk and residual value risk if new, younger aircraft cannot be obtained.
• Risks include the potential for aircraft to become obsolete, decline in customer demand, or lessees failing to meet payment obligations.
• Potential conflicts of interest may arise from SMBC AC's role as the exclusive servicer of aircraft leased to non-U.S. airlines.
• The company faces risks related to insurance coverage adequacy and insurer fulfillment of policy obligations.

Management Commentary and Tone:

• Management attributed the decrease in rental revenue to a lower weighted average net book value of flight equipment subject to operating leases resulting from the sale of the orderbook and continued sales activity.
• The decrease in gain on aircraft sales was driven by acquisition accounting adjustments, partially offset by higher management fee revenue from disposition fees.
• Management noted that the decrease in operating expenses was primarily due to lower depreciation expense, partially offset by increased servicing fees and higher interest expense due to fair value adjustments and an increase in the composite cost of funds.
• Management confirmed that as of November 5, 2026, there is no pending litigation related to the Russian fleet write-off recorded in March 2022.

Other Key Points:

• Total assets were approximately $29.9 billion as of September 30, 2026.
• In September 2026, the company received $27.3 million in cash insurance proceeds from the settlement of insurance claims related to its former Russian fleet.
• The merger was accounted for using the acquisition method of accounting, with purchase accounting allocations remaining preliminary as of September 30, 2026.
• Approximately $4.6 billion of aircraft assets were reclassified to flight equipment held for sale during the Successor period from April 8, 2026, through September 30, 2026.
• The company hosts a conference call on November 5, 2026, at 4:30 PM Eastern Time to discuss results.
• The company was acquired by Sumitomo Corporation, SMBC Aviation Capital, and investment vehicles affiliated with Apollo and Brookfield in April 2026.