Investing.com -- S&P Global Ratings has upgraded FTAI Aviation Ltd. to ’BB’ from its previous rating, citing improving credit metrics and strong growth in the company’s Aerospace Products segment.
The rating agency expects FTAI’s revenue to reach $2.6 billion in 2025 and exceed $3 billion by 2027, a significant increase from less than $1.2 billion in 2023. This growth is primarily driven by expansion in the company’s Maintenance, Repair, and Engine (MRE) business.
Despite shifting focus away from its higher-margin leasing operations, FTAI is maintaining substantial profitability with S&P Global Ratings-adjusted EBITDA margins projected to remain above 40% throughout the forecast period. The company’s debt has increased at a slower pace due to reduced emphasis on leasing and moderated capital expenditure.
These improvements have resulted in a debt to EBITDA ratio near 3x and funds from operations (FFO) to debt of 22%-26% in 2025, with further annual improvements expected thereafter.
FTAI has positioned itself to benefit from strong air travel demand and ongoing supply constraints in new aircraft, which have led to aging fleets and engine shortages. The company offers engine and module exchanges using its stock of refurbished parts, providing faster repairs compared to competitors.
Recent acquisitions have bolstered FTAI’s MRE capabilities, including QuickTurn in December 2023 and Lockheed Martin Commercial Engine Solutions in September 2024, which expanded its CFM56 engine repair capacity. The company also acquired a maintenance facility in Rome to extend its geographic reach.
Through a joint venture with Chromalloy, FTAI has received Federal Aviation Administration approval for some Parts Manufacturer Approval components for CFM56 engines, offering more cost-effective solutions for customers. Additionally, FTAI recently announced a strategic partnership with Palantir to implement an AI platform to enhance MRE business efficiency.
While aviation leasing represented more than half of FTAI’s EBITDA in 2024, this is expected to decline to approximately 44% in 2025 and below 30% in 2026. In December 2024, the company announced a strategic capital initiative in which it holds a 19% minority interest, enabling the deployment of over $6 billion for aircraft acquisitions.
S&P’s stable outlook reflects expectations that FTAI will maintain its improved credit metrics. The rating agency noted that future ratings could be lowered if debt to EBITDA rises above 4x or FFO to debt falls below 20%, which could happen if earnings underperform or if debt significantly increases.
Conversely, ratings could be raised if debt to EBITDA improves to well below 3x and FFO to debt exceeds 30% on a sustained basis, potentially occurring if the Aerospace Products segment grows faster than expected, margins expand beyond projections, and the company avoids large debt-financed acquisitions or shareholder returns.
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