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ASASLE

AerSale (ASLE) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Industrials· Aug 6, 2026

Source: earnings call transcript

Executive summary

AerSale Corporation Q2 FY26 — Strategic Investments Weigh on Current Margins, Strong H2 Expected

AerSale's Q2 FY26 results reflect a strategic investment phase, with revenue and adjusted EBITDA declines attributed to the timing of flight equipment sales and ramp-up costs for new MRO capacity. Management emphasizes that these are investments in future earnings power, not structural issues, and anticipates a "meaningfully stronger" second half as MRO facilities gain scale and asset monetization accelerates. The company is focused on expanding its lease pool, strategically monetizing inventory, and improving operational profitability.

Highlights

4

  • Leasing revenue grew approximately 50% year-over-year to $12.4 million, reflecting an expanded engine and freighter lease portfolio.

  • TechOps revenue grew nearly 9% to $33.8 million, driven by the ramp-up of the CRJ multi-line program and higher component MRO volume.

  • Placed fourth 757 converted freighter on lease in July and executed lease for a fifth, scheduled for delivery in August, leaving only two remaining.

  • Secured a 737 aircraft sale to the U.S. Marshal Service for $35 million, expected to close in late Q3 or early Q4.

Concerns

4

  • Total revenue was $70.9 million, down from $107.4 million in the prior year, primarily due to the absence of flight equipment sales.

  • Adjusted EBITDA was $2.2 million (3.1% of revenue), down from $18.3 million (17% of revenue) in the prior year period.

  • Overall gross margin decreased to 22.9% from 32.9% last year, impacted by the absence of high-margin flight equipment sales and ramp-up costs at MRO facilities.

  • Cash used in operating activities was $33.5 million year-to-date, reflecting continued investment in inventory and make-ready costs.

Guidance & targets

CategoryTargetConfidence
Second Half Performance
meaningfully stronger
high materiality
High
Earnings Consistency
improved and more consistent earnings
high materiality
High
AeroWare Demand Peak
peak in the third quarter of this year
medium materiality
High
737 Aircraft Sale Closure
late third or early fourth quarter
high materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Asset Management Solutions
Revenue decline driven primarily by the absence of flight equipment sales ($33.4M in prior year). Excluding flight equipment sales, revenue was down 13.6% due to lower USM sales, partially offset by higher leasing revenue from an expanded engine and freighter lease portfolio.
Leasing revenue: $12.4MLeasing revenue growth YoY: ~50%Engines on lease: 18757 freighters on lease: 3Feedstock acquisitions: $5.6MFeedstock acquisitions YoY change: down from $27.1M
$37.1M-51.3%——
TechOps
Revenue growth driven by the ramp-up of the CRJ multi-line program at Millington and higher component MRO volume. Margins decreased due to softer throughput at the accessory shop and ramp-up costs at Goodyear and Millington, which are expected to improve as utilization increases.
$33.8M8.7%——

Deals & partnerships

U.S. Marshal Service Sale of a 737 aircraft and several engines $35M

Secured during or subsequent to quarter end. The sale includes a 737 aircraft and several engines.

Undisclosed customer Lease of a fifth 757 converted freighter

Lease executed for a fifth 757 converted freighter, scheduled for delivery in August.

Risks & headwinds

Timing of flight equipment sales Q2 FY26

Absence of $33.4M in flight equipment sales in Q2 FY26 (vs. prior year) led to a significant revenue decline and impacted adjusted EBITDA and gross margin.

Mitigation:Management expects sales to close in late Q3/early Q4, leading to a 'meaningfully stronger' second half. Focus on strategic monetization and active leasing pipeline.

MRO facility ramp-up costs and slower work development Q2 FY26, expected to improve in H2 FY26

Startup costs at Millington and Goodyear weighed on margins; Goodyear operating at <20% capacity due to slower-than-expected heavy maintenance work related to ex-Spirit aircraft.

Mitigation:Expect margins to improve as utilization increases and operations gain scale and efficiencies. Increased stored aircraft at Goodyear are expected to accelerate production.

Hyper-competitive feedstock acquisition market Q2 FY26

Feedstock acquisitions were $5.6M in Q2 FY26, down from $27.1M in Q2 FY25, due to disciplined pricing.

Mitigation:Company remains disciplined in pricing and is reallocating USM material to build serviceable flight equipment for higher returns rather than selling piece parts.

Unavailability of serviceable engines Ongoing

Still holding airplanes on the ground due to engine unavailability.

Mitigation:Company has 17 engines in work expected to be ready soon for lease or sale. Focus on monetizing its own engine inventory.

What to watch in Q3 FY26

Flight equipment sales closure

late Q3 FY26 or early Q4 FY26
Current No sales in Q2 FY26
Target $35M 737 sale and several engine sales closed

Why it matters

The closure of these sales is critical for realizing expected H2 revenue and improving liquidity, as Q2 was significantly impacted by their absence.

This is evidenced by several wins secured during and subsequent to quarter end, which include a 737 aircraft sale to the U.S. Marshal Service for $35 million, in addition to several engines, which we expect to close in the late third or early fourth quarter.

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Q&A highlights

What are the current utilization rates for the MRO facilities (Millington, Goodyear, Landing Gear) and what are the expectations for improvement?

Millington has two lines in work with capacity for two more, with labor efficiency improving. Goodyear is operating at less than 20% capacity but storage is filling up, expecting a meaningful pickup in hanger work. Landing Gear is at 80% capacity on one shift, with plans to add a second shift due to increased volume from 737 MAX and 787 programs.

“At our facility in Goodyear, Arizona, we do, and as we've noted in the comments, have been operating at probably less less than 20% of our available capacity. However, our storage field is starting to fill up with a lot of yellow aircrafts, and we do expect as those operators and lessors start finding opportunities for those aircrafts to start getting a meaningful pickup and hanger work at those facilities.”

asked by Jen Van Sinderen · answered by Martin Garmendia

3 min read 7 chapters

Detailed narrative

Strategic Priorities and H2 Outlook

AerSale continues to focus on monetizing its asset base, scaling MRO operations, and growing recurring revenue streams. Despite Q2 revenue and adjusted EBITDA coming in below prior year, management views these results as timing-related, not indicative of trajectory. Significant investments in new capacity and capabilities at Goodyear, Millington, and Landing Gear are expected to drive stronger results in the second half of the year as volumes build and efficiencies improve. The company anticipates a "meaningfully stronger" second half, supported by an active leasing pipeline and accelerating asset sales.

MRO Operations Ramp-up and Margin Impact

The company is ramping up MRO operations at Millington and Goodyear. Millington's new CRJ 700-900 multi-line maintenance program drove higher MRO revenue, but startup costs weighed on margins. At Goodyear, additional labor was carried in anticipation of heavy maintenance work, which has been slower to develop, impacting margins. However, an increase in stored aircraft at Goodyear is expected to accelerate production. Landing gear operations are also seeing increased volume from two key customer programs (737 MAX and 787), contributing to confidence in long-term growth and margin recovery as utilization increases.

Asset Monetization Strategy

AerSale is focused on growing its recurring revenue through leasing and MRO, while also executing on select flight equipment sales for higher margin realization. The company placed its fourth 757 converted freighter on lease in July and executed a lease for a fifth, with only two remaining to monetize. The strategy involves dedicating cash to prepare material for sale or lease, with expected recovery and returns in H2. A $35 million 737 aircraft sale to the U.S. Marshal Service is expected to close in late Q3 or early Q4, alongside several engine sales.

USM Sales and Feedstock Acquisition

Lower USM sales contributed to the overall revenue decline, reflecting reduced feedstock acquisitions in the first half ($5.6 million in Q2 FY26 vs. $27.1 million in Q2 FY25) due to disciplined pricing in a competitive market. The company also consumed USM material to build serviceable flight equipment for sale or lease, a reallocation strategy aimed at realizing higher returns than selling material as piece parts. Management highlighted that assembling assets from USM parts can yield significantly higher margins and incremental dollar amounts compared to selling individual piece parts.

AeroWare Product Development

Demand for the AeroWare product remains strong, with an expected peak in Q3 FY26 ahead of the FAA's November 2026 compliance deadline for fuel tank flammability. The company is engaged with U.S. regulators and industry participants to highlight AeroWare's capabilities in enhancing situational awareness and flight safety. Management believes the growing regulatory focus on ADS-B in and pilot situational awareness supports the long-term opportunity for AeroWare, which offers meaningful advantages over existing technologies.

Cash Flow and Liquidity

Cash used in operating activities was $33.5 million year-to-date, primarily due to continued investment in inventory (feedstock and make-ready costs) for flight equipment. This is viewed as deliberate capital deployment expected to be monetized at attractive margins in H2, improving profitability and liquidity. The company ended the quarter with $376 million in inventory, $133 million in aircraft and engines held for lease, and $34 million in available liquidity, including $2.2 million cash and $31.8 million on its $180 million revolving credit facility.

Yellow Aircraft and Engine Monetization

The company is storing 84 ex-Spirit Airlines aircraft, referred to as "yellow airplanes," which will require maintenance as they come out of storage. Lessors are waiting for engines to become available, with some opting to part out airframes due to the high value of serviceable engines. This situation is expected to drive significant heavy maintenance work at Goodyear. The unavailability of engines continues to ground aircraft, but AerSale anticipates filling its Goodyear capacity for the next year with maintenance work on these and other customer aircraft.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.