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FTAI Aviation (FTAI) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Industrials· Jul 30, 2026

Source: earnings call transcript

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

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

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

FTAI operating KPIs by quarter

FTAI operating KPIs stated on its earnings calls, by fiscal quarter
KPI Dec 2025 Q4 FY25 Mar 2026 Q1 FY26This call Jun 2026 Q2 FY26Change vs prior quarter
Refurbished CFM56 modules
228 We refurbished 228 CFM56 modules this quarter across our 3 facilities, an increase of 68% compared to Q4 2024, bringing our total for the year to 757 modules. Source: earnings call transcript
270 We refurbished 270 CFM56 module this quarter across our 4 facilities, an increase of 96% compared to Q1 2025. Source: earnings call transcript
296 On the production front, we refurbished 296 CFM56 modules this quarter across our 4 facilities, an increase of 61% compared to Q2 2025. Source: earnings call transcript
+9.6%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Mod-1 Deliveries $1.465 billion Q2 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

ProductTypeDetails
LEAP Engine Testing Capabilitiesexpansion
Mod-1 Power Unitlaunch

Deals & partnerships

Jereh Group Joint 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 AeroAsia Strategic 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.

EgyptAir Strategic partnership for engine maintenance in Cairo, Egypt.

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

AEI Partnership 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

Mod-1 Production Build-out underway
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

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

Power Segment EBITDA Guidance Revision

Next quarter
Current $450 million (low end of $450M-$750M range)
Target Increase 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.

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Q&A highlights

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 read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

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