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    FTAI
    Earnings call· Jun 2026(Q2 FY26)

    FTAI Aviation Q2 FY26 earnings call FTAI

    Jul 30, 2026 Source

    Executive summary

    FTAI Aviation Q2 FY26 — Strong Aerospace Products Growth and Landmark Power Order

    FTAI Aviation delivered strong Q2 FY26 results, driven by robust growth in Aerospace Products and a landmark $1.465 billion order for its Power segment. The company is strategically shifting towards an asset-light model, prioritizing market share gains in engine maintenance and accelerating its Power initiative, which is expected to be a significant growth driver. This evolution positions FTAI for long-term value creation across its diversified turbine-focused businesses.

    Highlights

    5

    • Aerospace Products EBITDA grew 51% YoY to $249.7 million and 12% QoQ to $249.7 million.

    • Total module production for 2026 is now expected to be 1,200 modules, up from 1,050 previously projected.

    • FTAI Power secured a master supply agreement with a leading U.S. hyperscaler and an initial purchase order valued at $1.465 billion for 2027 Mod-1 deliveries.

    • Adjusted free cash flow for H1 2026 was $255 million, with a full-year target of $878 million.

    • Dividend increased for the fourth consecutive quarter by $0.05 per share to $0.50 per share.

    Concerns

    2

    • Aviation Leasing EBITDA guidance for 2026 was revised down to $475 million due to prioritizing an asset-light balance sheet and directing module production to Aerospace Products.

    • Aerospace Products EBITDA margins remained at 29%, reflecting a strategic decision to prioritize market share and large customer penetration over higher percentage margins.

    Guidance & targets

    9
    CategoryTargetConfidence
    Total Module Production
    1,200 modules
    medium materiality
    High
    Adjusted Free Cash Flow
    $878 million
    high materiality
    High
    Aviation Leasing EBITDA
    $475 million
    high materiality
    High
    Aerospace Products EBITDA
    $1.05 billion
    high materiality
    High
    Total Business Segment EBITDA
    $2.3 billion
    high materiality
    High
    Aerospace Products EBITDA
    $1.4 billion
    high materiality
    High
    Aviation Leasing EBITDA
    $450 million
    high materiality
    High
    Power EBITDA
    $450 million
    high materiality
    High
    Quarterly Dividend Per Share
    $0.50
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Aerospace Products
    Strong top-line growth and EBITDA expansion, reflecting continued momentum from production growth and operating leverage. Margins maintained at 29% due to strategic prioritization of market share and large customer penetration, accepting a mix shift towards heavier work scopes.
    EBITDA: $249.7 millionYoY EBITDA growth: 51%QoQ EBITDA growth: 12%
    		—78%18%29%
    Aviation Leasing
    Continued evolution to an asset-light model, with SCI becoming the home for leased assets. This results in a smaller near-term leasing business until SCI contributions fully kick in.
    Insurance recoveries: $5 millionBalance sheet leasing and gains on sale: $48 million2025 SPV management fees and co-investment returns: $35 million
    		———$88.2 million
    Corporate and Other
    Includes interest segment eliminations and start-up expenses associated with the power initiative.
    		———negative $46.5 million

    Operational metrics

    23
    Adjusted EBITDA
    $291.4 million
    Q2 FY26

    Continued the year positively with adjusted EBITDA of $291.4 million for the quarter.

    Adjusted EBITDA
    $249.7 millionup 51% year-over-year, up 12% quarter-over-quarter
    Q2 FY26

    Aerospace Products delivered another good quarter with $249.7 million of EBITDA at an overall EBITDA margin of 29%. This is up 12% sequentially from $222.6 million in Q1 of 2026 and up 51% year-over-year compared to $164.9 million in Q2 of 2025.

    EBITDA Margin
    29%in line with prior quarter
    Q2 FY26

    EBITDA margins of 29% were in line with the prior quarter, which is a continued reflection of our decision to prioritize market share and large customer penetration.

    CFM56 Module Production
    296 modulesincrease of 61% compared to Q2 2025
    Q2 FY26

    On the production front, we refurbished 296 CFM56 modules this quarter across our 4 facilities, an increase of 61% compared to Q2 2025.

    CFM56 Module Production
    566 modulesahead of midyear target
    H1 FY26

    That brings first half production to 566 modules, which is ahead of our midyear target.

    CFM56 Module Production Capacity
    3,000 modules per year
    Annual

    bringing our total physical CFM56 module production capacity to 3,000 modules per year which is enough to achieve our 25% market share objective and produce 100 Mod-1's per annum.

    Market Share
    14%grew from 12%
    Q2 FY26

    Our market share grew from 12% to 14% this quarter as gains from our production capabilities, parts procurement strategies and overall maintain repair and exchange MRE customer adoption continued.

    Leverage Profile
    2.7x
    Q2 FY26

    Our balance sheet continues at a leverage profile in line with our target range of 2.5 to 3x and ended this quarter at 2.7x.

    Series C Preferred Shares Redeemed
    $105 million
    Q2 FY26

    During the quarter, we also redeemed a part the $105 million of 8.25% Series C preferred shares outstanding

    R&D Investments
    $30 millionadditional
    FY26

    as well as an additional $30 million of R&D investments in FTAI Power to advance new capabilities.

    Mod-1 Production Build-out Acceleration
    $150 million
    FY26

    On new growth initiatives, we are accelerating the Mod-1 production build-out by $150 million following successful engineering testing and robust commercial demand.

    Dividend Per Share
    $0.50increase from $0.45
    Quarterly

    for the fourth consecutive quarter, we're announcing another increase to our dividend from $0.45 a quarter to $0.50 per share.

    Dividend Count
    45th
    Since IPO

    This marks our 45th dividend as a public company and our 60th consecutive event since inception.

    Technicians
    over 200
    Current

    This 250,000 square foot facility has both 5B and 7B heavy repair capabilities as well as an engine test cell and over 200 technicians.

    Lisbon Facility Expansion
    113,000 square foot
    Current

    We're adding a 113,000 square foot facility to our network with the goal of expanding production capacity to over 300 modules per year.

    Cargo Aircraft Production
    about 20
    Annual

    And we expect that roughly we could produce about 20 cargo aircraft a year, which would require 40 engines.

    Aircraft closed or under LOI
    over 300
    Q2 FY26

    The 2025 SCB is now fully committed with over 300 aircraft closed or under LOI

    ABS Issuance
    $612 million
    Q2 FY26

    One big accomplishment during the quarter was SEI's first ABS issuance MRE 2026 which consisted of $612 million of bonds and allowed for a special distribution to investors in July.

    Target Raise
    $6 billion
    2026

    and launched the 2026 SPV with a target raise of $6 billion

    Equity Co-investment
    15%
    2026 SPV

    FTAI will remain a large co-investor in the vehicle with a 15% commitment

    Initial Purchase Order Value
    $1.465 billion
    2027 deliveries

    and an initial purchase order valued at $1.465 billion, for 2027 Mod-1 deliveries.

    Per-Module EBITDA
    —
    2027

    So if we just do that math, that seems to imply only about $4.5 million per module, which seems to be significantly below the economics that you had provided before. So I was wondering, can you clarify whether your 2027 outlook accounts for 100 air derivatives? Or is this a lower number? And how do we reconcile this with the terms of the strategic agreement you provided with Jereh. Is this an apples-to-apples on 100? Or are there changes in units we should think about?

    Per-Megawatt Economics
    —
    Future

    I want to confirm that with the economics for Power going forward, is it still about that $1 million to $2.5 million per megawatt for the CFM56 conversions?

    Industry KPIs

    1
    MetricValueDetails
    Production capacity expansion3,000 modules per yearunits

    Orderbook & backlog

    1
    Mod-1 Deliveries$1.465 billionQ2 FY26

    Initial purchase order from a leading U.S. hyperscaler, fulfilling a key portion of targeted 2027 Mod-1 delivery equipment. Deliveries in batches through November 2027.

    Product announcements

    2
    ProductTypeDetails
    LEAP Engine Testing Capabilitiesexpansion
    Mod-1 Power Unitlaunch

    Deals & partnerships

    4
    Jereh GroupJoint venture for FTAI Power, signed master supply agreement with a leading U.S. hyperscaler and initial purchase order for Mod-1 deliveries.

    The joint venture signed a 5-year master supply agreement with a leading U.S. hyperscaler, establishing a framework for additional purchase orders.

    GMF AeroAsiaStrategic partnership for engine maintenance in Jakarta, Indonesia.

    Facility is majority-owned by Garuda Group, an important FI customer. Aims to build presence near customers and leverage local talent.

    EgyptAirStrategic partnership for engine maintenance in Cairo, Egypt.

    Aims to build connectivity between the EgyptAir shop and Rome and Lisbon facilities.

    AEIPartnership for 737-800 freighter conversion.

    AEI is a leader in 737-800 freighter conversion. FTAI expects to produce about 20 cargo aircraft per year, requiring 40 engines.

    Capital programs

    1
    Mod-1 Production Build-outunderway
    Period spend: $150 million

    Benefit: Accelerating production following successful engineering testing and robust commercial demand.

    We are accelerating the Mod-1 production build-out by $150 million following successful engineering testing and robust commercial demand.

    Risks & headwinds

    3
    Near-term decline in Aviation Leasing EBITDA due to strategic shift to asset-light model and reallocation of module production.Near-term, until SCI's contributions fully kick in (expected to resume growth in 2027).

    2026 Aviation Leasing EBITDA revised down to $475 million.

    Mitigation: Prioritizing market share growth in Aerospace Products, directing module production to third-party customers, and growing SCI SPVs as the new home for leased assets.

    EBITDA margin compression in Aerospace Products due to mix shift towards heavier work scopes and prioritization of market share.Near term (1-2 years).

    EBITDA margins at 29%, in line with prior quarter, below historical highs.

    Mitigation: Strategic decision to prioritize market share and large customer penetration, which generates more dollar profit per engine despite lower percentage margins. Expects margins to stabilize around 30% for the near term.

    Ramp-up costs and timing variability for the new FTAI Power business.2027 and initial ramp-up phase.

    2027 Power EBITDA guidance set conservatively at $450 million (low end of $450M-$750M range).

    Mitigation: Starting with a conservative guidance number with high conviction and visibility, with expectation to raise it as additional customer contracts are signed. Initial purchase order includes advance and milestone payments to derisk working capital.

    What to watch in Q3 FY26

    5

    Power Segment EBITDA Guidance Revision

    Next quarter
    Current$450 million (low end of $450M-$750M range)
    TargetIncrease in 2027 Power EBITDA guidance

    Why it matters

    Indicates progress in securing additional customer contracts and commercializing the Mod-1 platform beyond the initial hyperscaler order, impacting the long-term growth trajectory of the Power segment.

    So -- and what we decided to do was start with the $450 million at the bottom end of the range, where we have the highest conviction and the most visibility such that as we sign up additional customers and contracts, which we very much expect to do we hopefully💬 will be raising that number up from $450 million, not decreasing that number.

    Q&A highlights

    5

    Clarify if the $450M Power EBITDA guidance for 2027 assumes 100 module deliveries, and if the per-module economics are still $1M-$2.5M per megawatt.

    Management stated the $450M guidance does not assume 100 units, but a materially lower number, representing the conservative low end of a $450M-$750M range. They aim to raise it with additional contracts. They confirmed unit economics are consistent with prior expectations but declined to provide exact commercially sensitive numbers.

    “So just the first point is the $450 million does not assume 100 units, it's materially less than the 100 assumption. And just as by background, since this is a new business for us, and happily, we have the first signed contract in hand for material portion of next year's production we took a look at a range of outcomes possible for 2027 and came up to a range of $450 million to $750 million.”

    asked by Kristine Liwag · answered by Joseph Adams

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Shift to Asset-Light Model

    FTAI is actively transitioning from an asset-heavy leasing business to an asset-light model focused on advanced turbine technology. This involves directing module production towards third-party customers in Aerospace Products rather than replenishing its own aviation leasing pool, and housing leased assets within the Strategic Capital (SCI) SPVs. This shift is expected to result in a smaller aviation leasing business in the near term, with growth resuming in 2027 as SCI contributions fully kick in.

    02

    Aerospace Products Expansion and Market Share

    The Aerospace Products segment saw significant growth, with production increasing over 60% YoY and market share growing from 12% to 14% for CFM56 and V2500 engines. The company added new capacity, bringing total CFM56 module production capacity to 3,000 modules per year. Strategic partnerships were announced with GMF AeroAsia in Jakarta, Indonesia, and EgyptAir in Cairo, Egypt, to expand maintenance capabilities and diversify footprint, adding a 250,000 sq ft facility in Jakarta and a 100,000 sq ft facility in Cairo.

    03

    FTAI Power Commercialization

    FTAI Power achieved a landmark with its joint venture, J&F Power Systems, signing a master supply agreement with a U.S. hyperscaler and an initial purchase order for $1.465 billion for 2027 Mod-1 deliveries. This order includes significant advance payments and milestone-based progress payments, derisking working capital investment. The Mod-1 platform is being evolved with a technology roadmap including SCR for emission reductions and combined cycle for efficiency gains, aiming to compete with grid power on cost and reliability.

    04

    Strategic Capital Initiatives

    The 2025 SPV is fully committed and has transitioned to harvest mode, making its first regular quarterly distribution. SCI completed its inaugural asset-backed security (ABS) issuance (MRE 2026) of $612 million, enabling a special distribution to investors. The 2026 SPV has been launched with a target raise of $6 billion, with FTAI committing 15% as a co-investor, maintaining consistency with the 2025 SPV's investment strategy.

    05

    LEAP Engine Strategy

    FTAI is developing a new test cell at its QuickTurn Europe facility in Rome that will include both CFM56 and LEAP testing capabilities. This is an intentional investment in the broader LEAP plan, with expectations that the LEAP market will be 2 to 3 times the size of the CFM56 market in annual maintenance spend. The company anticipates entering the LEAP engine market in 2028-2029, likely through SCI investments.

    06

    Cargo Business Partnership

    A partnership with AEI, a leader in 737-800 freighter conversion, was announced. This collaboration aims to deliver customized freighter solutions at scale and lower cost, reinforcing FTAI's strategy to maximize the CFM56 life cycle by extending engine life through cargo operations before redeploying them into mobile power. The company expects to produce about 20 cargo aircraft per year, requiring 40 engines.

    AI-generated summary of the company’s earnings call. Not investment advice.