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FTAI Aviation (FTAI) Q4 FY25 earnings call: guidance and Q&A

Earnings call· Dec 2025 (Q4 FY25)· Industrials· Feb 26, 2026

Source: earnings call transcript

Executive summary

FTAI Aviation Q4 FY25 — Strong Growth in Aerospace Products and Launch of FTAI Power

FTAI Aviation concluded a defining Q4 FY25, marked by significant execution and strategic progress across its Aerospace Products, Aviation Leasing, and newly launched FTAI Power segments. The company achieved strong growth in engine maintenance, successfully deployed capital for its SCI I fund, and initiated fundraising for SCI II. While making substantial investments in future growth, the company also increased its dividend, signaling confidence in its long-term strategy to capitalize on market opportunities in the aftermarket and AI-driven power demand.

Highlights

5

  • Aerospace Products Q4 adjusted EBITDA reached $195 million, marking a 66% increase year-over-year.

  • Full-year 2025 Aerospace Products adjusted EBITDA was $671 million, exceeding the original target of $600 million to $650 million.

  • SCI I secured $2 billion in equity commitments, establishing it as the largest fund dedicated to narrow-body midlife aircraft.

  • Total module refurbishment for 2025 achieved 757 units, surpassing the initial goal of 750 modules.

  • The quarterly dividend was increased for the second consecutive quarter, from $0.35 to $0.40 per share.

Concerns

2

  • Q4 Aerospace Products EBITDA was slightly below expectations due to increased headcount costs and customer-requested delivery deferrals into Q1 2026.

  • Full-year 2026 Free Cash Flow guidance was revised down to $915 million from $1 billion, reflecting $85 million in increased SCI II investments and $100 million in additional Power working capital.

Guidance & targets

CategoryTargetConfidence
Full-year 2026 Total Business Segment Adjusted EBITDA
$1.625 billion
high materiality
High
Full-year 2026 Aerospace Products Adjusted EBITDA
$1.05 billion
high materiality
High
Full-year 2026 Aviation Leasing Adjusted EBITDA
$575 million
medium materiality
High
Full-year 2026 Free Cash Flow
$915 million
high materiality
High
Full-year 2026 Module Production Target
1,050 modules
medium materiality
High
FTAI Power Production Units
100 units
high materiality
High
FTAI Power First Production Units Delivery
Q4 2026
high materiality
High
SCI I Capital Deployment Completion
End of Q2 2026
medium materiality
High
SCI II Investment Start
By June 30, 2026
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Aerospace Products
Finished the year with great momentum, exceeding original full-year adjusted EBITDA goal. Growth driven by fixed-price engine offerings and increasing market adoption. Surpassed 2025 module goal.
Full-year 2025 Adjusted EBITDA: $671 millionFull-year 2025 Module Refurbishments: 757Q4 2025 Module Refurbishments: 228Q4 2025 Module Refurbishments Growth YoY: 68%
—66%—$195 million adjusted EBITDA
Aviation Leasing
Continued strong results, with EBITDA mix shifting towards SCI as new SPV partnerships launch. Exceeded full-year target of $600 million.
Q4 2025 Adjusted EBITDA from SCI: $20 millionQ4 2025 Adjusted EBITDA from balance sheet assets: $93 millionFull-year 2025 Leasing EBITDA: $609 millionFull-year 2025 Leasing EBITDA from Russian insurance claim recoveries: $54 million
———$113.2 million adjusted EBITDA
Corporate and Other
Includes intersegment elimination and start-up expenses associated with the Power initiative.
———negative $31 million

FTAI operating KPIs by quarter

FTAI operating KPIs stated on its earnings calls, by fiscal quarter
KPIThis call Dec 2025 Q4 FY25 Mar 2026 Q1 FY26 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

SCI I Aircraft Closed or Under LOI 276 aircraft Call date

Representing $5.3 billion of the $6 billion target for SCI I.

SCI I Aircraft Closed 130 aircraft December 31, 2025

Deployment for 2025.

Product announcements

ProductTypeDetails
FTAI Powerlaunch
FTAI Power Mod-1launch

Deals & partnerships

Strategic Capital Initiative I (SCI I) Investors Fund focused on acquiring 737NG and A320ceo aircraft. $6 billion total capital

Largest fund ever dedicated to narrow-body midlife aircraft. Includes support from ATLAS (Apollo affiliate) and Deutsche Bank. 130 aircraft closed as of Dec 31, 2025, with 276 closed or under LOI representing $5.3 billion of the target.

Strategic Capital Initiative II (SCI II) Anchor Equity Commitment Fund focused on acquiring 737NG and A320ceo aircraft.

Fundraising process started for SCI II, with an anchor equity commitment in place. Expected to start investing by June 30, 2026.

CFM Multiyear materials agreement. multiyear

Reinforces shared priority to extend the life of CFM56 engines through an open MRO ecosystem.

Capital programs

FTAI Power Working Capital underway $250 million
Period spend: $150 million
Spent to date: $150 million
Start: Q4 2025

Benefit:Support turbine feedstock and a rotable pool of key components for 2026 production ramp.

Proactively invested $150 million in Q4 2025 to secure additional turbines ahead of demand. Remaining $100 million expected in 2026.

Hot Section Parts Investment completed $50 million
Period spend: $50 million
Spent to date: $50 million
Start: Q4 2025

Benefit:Critical input for engine maintenance business in a tight parts market.

Additional investment made in Q4 2025.

Montreal Facility Retrofitting (FTAI Power) underway
Start: Q4 2025

Benefit:Establish a dedicated production line for the Power business, with future expansions planned for Montreal, Miami, and Rome.

Components transitioning from Aerospace into Power applications will not return to aerospace service, maintaining separation for regulatory and asset integrity.

Risks & headwinds

Headcount growth and productivity lag Q4 2025

Q4 Aerospace Products EBITDA slightly less than expected

Mitigation:Training academy, workflow optimization, AI integration to improve productivity.

Customer-requested delivery deferrals Q4 2025 to Q1 2026

Few engines slid from 2025 into 2026

Mitigation:Accommodated customer needs, implying flexibility in operations.

Increased investments impacting near-term free cash flow FY26

2026 FCF revised down to $915 million from $1 billion due to $85 million increased SCI II investments and $100 million additional Power working capital.

Mitigation:These are high-return growth investments across SCI, Power, and Aerospace expected to drive meaningful value into 2027 and beyond.

What to watch in Q1 FY26

SCI I Capital Deployment Completion

End of Q2 2026
Current 276 aircraft closed or under LOI ($5.3B of $6B target)
Target Fully invested

Why it matters

Completion of SCI I deployment is a key milestone before full transition to SCI II, impacting future asset management revenue.

As of today, we now have 276 aircraft closed under LOI, representing $5.3 billion of our $6 billion target, and we remain on track to be fully invested by the end of the second quarter.

Find out whether FTAI delivers this. Inve re-checks your case every morning.

Q&A highlights

How do PMA blades, CFM materials deal, and other initiatives support the 40% AP margin target, and what is the mix going forward?

Joe Adams confirmed progress on all three drivers (PMA HPT blade approved, lower-cost parts via CFM deal and used material, expanded piece part repair capabilities). He stated confidence in achieving 40% margin but noted a potential prioritization of market adoption and broader customer base over incremental margin percentage if opportunities arise for bigger programs.

“everything we wanted to have in place to achieve that 40% margin is in place, and we are very confident that we have the capability to do that, to grow that in 2026 to 40%.”

asked by Sheila Kahyaoglu · answered by Joseph Adams

2 min read 6 chapters

Detailed narrative

Strategic Capital Initiative (SCI) Progress

FTAI successfully launched SCI I, securing $2 billion in equity commitments and deploying $5.3 billion of its $6 billion target across 276 aircraft (closed or LOI) by Q4 2025, leveraging its engine maintenance capabilities. The company is on track to be fully invested in SCI I by Q2 2026 and has already secured an anchor equity commitment for SCI II, aiming to become the world's largest manager of mid-life narrow-body aircraft.

Aerospace Products Performance & Outlook

The Aerospace Products segment delivered strong Q4 FY25 adjusted EBITDA of $195 million (35% margin), contributing to a full-year adjusted EBITDA of $671 million, exceeding its revised target. This growth is driven by increasing market adoption of its fixed-price engine exchange model for CFM56 and V2500 engines, with total module refurbishment reaching 757 units in 2025. The company targets 1,050 modules in 2026, a 39% increase.

FTAI Power Launch and Strategy

FTAI launched FTAI Power, a new platform converting CFM56 engines into 25-megawatt aero derivative power turbines, targeting the surging demand for AI data center power. The company proactively invested $150 million in Q4 2025 for turbine feedstock and aims for 100 units of production in 2027, with first deliveries expected in Q4 2026. This initiative leverages existing infrastructure and technical expertise, offering a fast, flexible, and scaled power solution.

MRE Network Expansion and Efficiency

FTAI continues to strengthen its Maintenance, Repair, and Exchange (MRE) network. This includes expanding facilities in Montreal, Rome (doubling employee base), and Miami (integrating ATOPS acquisition), alongside investments in component repair capabilities (Pacific and Prime Engine Accessories). The integration of Palantir's AI platform is also enhancing productivity and supply chain optimization.

Market Dynamics and Competitive Advantage

The long-term outlook for the CFM56 and V2500 aftermarket remains strong, with total maintenance spend expected to grow to $25 billion per annum. Airlines are extending the life of existing fleets, and shop visit demand is shifting to heavier overhauls. FTAI's multiyear materials agreement with CFM provides OEM replacement parts, reinforcing its competitive position and ability to scale its module remanufacturing platform.

Financial Performance and Capital Allocation

FTAI reported Q4 FY25 adjusted EBITDA of $277.2 million and full-year adjusted EBITDA of $1.2 billion. The company ended the year at 2.6x leverage, achieving a strong BB rating across all three agencies. Despite increased investments in SCI II and FTAI Power, leading to a revised 2026 free cash flow target of $915 million, the company increased its quarterly dividend to $0.40 per share, reflecting confidence in future growth and capital redistribution.

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