Asked if future analyst coverage would guide to earnings with or without gains, similar to AerCap.

Scott Flaherty declined to comment on future guidance format, stating he didn't want to get ahead of themselves, but acknowledged the analyst's point. “Well, I don't want to -- Jordan, I don't want to get ahead of ourselves on guidance, but your point is taken.”

Asked about the future growth capacity of the asset management business, institutional demand, and potential for future funds.

Austin Willis confirmed strong demand from institutional investors and stated the intention is to deploy current capital, then raise additional larger funds in the future, as this is a long-term strategy. “The answer is yes. We are seeing a lot of demand for the product. Since we closed on the funds, we've received a lot of inbounds from institutional investors looking to replicate that. Our focus for the time being is deploying the capital that we've raised. But I think I mentioned this in a previous earnings call. The 2 discretionary funds we raised, it's not a one-off for us. This is not intended to be sort of a one-off sidecar. This is a genuine long-term asset management strategy. So our intention is to deploy the capital in these 2 funds and then go out and raise additional larger funds in the future, really relying on our platform to deliver a premium return to the investors.”

Asked if the mix between long-term and short-term leases has shifted from the historical 50% due to market uncertainty and higher fuel prices.

Austin Willis stated the mix is still around 50%, though the average lease term is slightly shorter. He noted a trend towards long-term conditions for new tech engines due to portfolio modernization. “It's still around 50%. The term of our leases is a little bit shorter than it was last year, but I wouldn't attribute that to anything really in particular. It's still about 50-50.”

WLFC

Willis Lease Finance (WLFC) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Industrials· Aug 4, 2026

Source: earnings call transcript

Executive summary

Willis Lease Finance Corporation Q2 FY26 — Strong Asset Growth and Strategic Fund Deployment

Willis Lease Finance Corporation reported a solid Q2 FY26, marked by significant growth in assets under management and strategic deployment of capital into new funds. The company navigated a dynamic macro environment, focusing on modern engine platforms and expanding its asset management capabilities. While some revenue streams saw temporary declines, the core leasing business remained strong, supported by strategic acquisitions and a robust pipeline for future growth.

Highlights

Assets under management increased 21% from $3.6 billion in Q2 2025 to $4.4 billion in Q2 2026.
Adjusted EBITDA grew 4% to $120.7 million in Q2 2026 from $116.1 million in Q2 2025.
Lease rent revenues increased 6.7% year-over-year to $77.1 million.
Management and advisory fees surged 113% to $5.5 million, driven by new fund operations.
Successfully acquired 15 aircraft and 13 engines through two M&A transactions.

Concerns

Short-term maintenance reserve revenue decreased from $50.2 million in Q2 2025 to $39 million in Q2 2026 due to reduced flight hours on older, less fuel-efficient engines.
Equipment sales declined to $10.1 million in Q2 2026 from $21.1 million in Q2 2025.
General and administrative expenses increased by $5.1 million to $55.6 million, partly due to a $2.7 million rise in legal fees.

Guidance & targets

Category	Target	Timeline	Confidence
Share-based compensation expense	approaching 50% of its estimated 2026 cost medium materiality	FY28	High
Future fund raising	additional larger funds high materiality	Future	High

Deals & partnerships

China Airlines and EVA Air Acquisition of vehicles owning 3 Airbus A330-300 aircraft

Acquired in June 2026. The aircraft were leased to China Airlines and EVA Air.

Private equity entities Acquisition of entities owning 12 commercial aircraft and 13 aircraft engines

Signed definitive documentation in July 2026. These acquisitions provide opportunity to extract additional value using WLFC's platform and programs.

Pratt & Whitney Major engine storage agreement

Signed last week (late July/early August 2026) after nearly a year of on-site inspections and quality audits. WLFC will be custodians of their assets at maintenance facilities in the US and UK.

Blackstone Blackstone Fund commenced operations

Commenced operations in April 2026. WLFC acts as GP.

Liberty Mutual Liberty Mutual Fund commenced operations

Commenced operations in March 2026. WLFC acts as GP. Primarily focuses on finance leases or loan-like products.

Mitsui Willis Mitsui joint venture

Continued build of the joint venture. WLFC sold its fleet management (BAML) business to this JV on June 30, 2025.

CASC CASC joint venture in Shanghai

A joint venture in Shanghai.

Risks & headwinds

Geopolitical events and market disruption Q2 2026

Affected aircraft and engine transaction volume

Mitigation:WLFC's integrated platform and flexible solutions allow performance across different market environments.

Reduced flight hours on less fuel-efficient engines Q2 2026

Short-term maintenance reserve revenue down from $50.2 million in Q2 2025 to $39 million in Q2 2026

Mitigation:Maintenance reserve revenues from older engine types are improving; modern engines (LEAP, GTF) saw increased utilization; WLFC's 'constant thrust' product facilitates transitions.

Engine-related technical issues with new aircraft platforms Ongoing

A320neos and 737 MAX aircraft had entry into service difficulties

Mitigation:LEAP and GTF engines are reaching maturity, leading to expected acceleration in demand for off-wing maintenance.

What to watch in Q3 FY26

Recovery in operating tempo and maintenance reserve revenues

Next quarter (Q3 FY26)

Current Started to see recovery at tail end of Q2

Target Continued recovery and stabilization

Why it matters

Indicates demand for older engine types and overall market health, impacting a key revenue stream.

At the tail end of the second quarter, we started to see a recovery in operating tempo and the related maintenance reserve revenues as a cease fire took hold in Iran and fuel prices began to decline.

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

Q&A highlights

Inquired about the mark on assets placed in SPVs and how it highlights the undervaluation of assets on WLFC's balance sheet, drawing a comparison to AerCap.

Austin Willis stated the SPV portfolio composition broadly mirrors the balance sheet. Scott Flaherty quantified that $224 million of assets were sold with a $32 million gain (14.2% gross margin), and the overall portfolio has an embedded 20% gain based on industry appraisals compared to book value. Austin added that asset sales are granular and vary.

“As you heard in our prepared remarks, we sold about $224 million of assets and recognized a $32 million gain on those assets. So that's 14.2%. I think as we've talked about the mark of the overall portfolio, and as you know, we do this on an annual basis, we see that the overall portfolio is coming in at about 20% below the value that we have appraised.”

asked by Jordan Hymowitz · answered by Scott Flaherty

2 min read 5 chapters

Detailed narrative

Strategic Growth and Asset Management

WLFC continues to execute its strategy of growing assets under management, which increased 21% to $4.4 billion in Q2 2026. This growth is driven by both on-balance sheet assets and the expansion of Willis Aviation Capital (WAC) to $1.4 billion, an 80% increase year-over-year.

The company has largely completed seeding its Blackstone and Liberty Mutual funds, with $1.3 billion of additional capital ready for deployment in discretionary funds.

Fleet Modernization and Engine Demand

The company's consolidated portfolio is 60% modern tech engines (LEAP, GTF, GEnx), positioning it well for future demand. While older engine types (CFM56, V2500) saw reduced flight hours and maintenance reserve revenue due to higher fuel prices, demand for LEAP and GTF engines is expected to accelerate as they mature and require more frequent maintenance.

WLFC's "constant thrust" product is designed to facilitate transitions from older to newer assets.

M&A and Portfolio Expansion

WLFC has increased its focus on M&A, participating in both marketed and off-market deals. The company recently acquired entities owning 3 Airbus A330-300 aircraft and signed definitive documentation to acquire entities owning an additional 12 commercial aircraft and 13 aircraft engines. These acquisitions expand the portfolio and customer base, with sellers increasingly preferring entity sales to avoid lengthy novation processes.

Services Business as a Differentiator

The Services business remains a strategic advantage, with a major engine storage agreement signed with Pratt & Whitney. This reflects confidence in WLFC's maintenance facilities in the US and UK, with plans for a new center in Asia. The Willis Engine Repair Center (WERC) model is replicable, enhancing the company's ability to provide differentiated offerings and increase profitability.

Capital Structure and Liquidity

WLFC maintains a strong capital structure with low leverage of 2.78x. The company issued $200 million in 2.5% convertible senior notes due 2031, using proceeds to delever its revolving credit facility and enhance business flexibility. This move converts higher-cost revolver leverage to lower-coupon convertible debt, immediately accretive to the P&L. A 3-for-1 stock split was also effected to increase liquidity for investors.

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