NEW YORK - FTAI Aviation Ltd. (NASDAQ: FTAI), an owner and operator of commercial jet engines, announced today the completion of its management internalization process. The company has terminated its Management and Advisory Agreement and Services and Profit Sharing Agreement with FIG LLC, effective immediately. This transition marks FTAI's shift from an externally managed enterprise to a self-managed structure.
The internalization agreement requires FTAI to pay the former manager $150 million in cash, along with accrued compensation, reimbursable expenses, and additional costs. Additionally, FTAI will issue 1,866,949 ordinary shares to the manager.
The company's leadership team remains unchanged, with Joe Adams at the helm as Chairman and CEO, Angela Nam as CFO and CAO, and David Moreno as a senior executive. FTAI also plans to offer employment to certain individuals who currently serve the company through the manager, particularly in the Legal, IT, Accounting, Tax, and Treasury departments.
FTAI anticipates this change will generate approximately $30 million in annual cost savings initially, with expectations for the savings to increase in subsequent years. Joe Adams expressed confidence in the team's ability to drive long-term growth and success, emphasizing the immediate cost savings and shareholder value resulting from the agreement.
As part of the transition to internal management, FTAI has also entered into a Transition Services Agreement with the former manager to ensure continuity of services during the interim period.
Prior to internalization, FTAI was managed by FIG LLC, an affiliate of Fortress Investment Group LLC, which provided management personnel and infrastructure in exchange for a management fee and reimbursement of certain expenses.
A Special Committee of independent and disinterested directors was formed by FTAI's Board to negotiate and approve the terms of the internalization. Financial advisory and legal counsel were provided by Houlihan Lokey (NYSE:HLI) and Wilson Sonsini Goodrich & Rosati to the Special Committee, and by Citi and Skadden, Arps, Slate, Meagher & Flom LLP to the manager.
FTAI specializes in owning and leasing commercial jet engines, focusing on CFM56 and V2500 engines. The company invests in aviation assets and aerospace products that offer strong cash flows and potential for earnings growth and asset appreciation.
This report is based on a press release statement from FTAI Aviation Ltd.
InvestingPro Insights
FTAI Aviation Ltd. (NASDAQ: FTAI) has embarked on a significant structural shift with its move to internal management. This strategic decision is expected to streamline operations and enhance shareholder value, a move that is well-reflected in the company's strong financial metrics and market performance. According to the latest data from InvestingPro, FTAI boasts an impressive market capitalization of $8.47 billion, underscoring the company's substantial market presence.
In terms of performance, FTAI has demonstrated compelling growth with revenue increasing by 32.49% over the last twelve months as of Q1 2024. This growth trajectory is complemented by robust gross profit margins of 49.19%, suggesting that the company is efficiently managing its cost of sales relative to its revenue. Moreover, FTAI's P/E ratio stands at 39.57, which, when adjusted for the last twelve months as of Q1 2024, slightly lowers to 35.86. This indicates that investors are willing to pay a higher price for the company's earnings, possibly due to optimistic future growth prospects.
InvestingPro Tips highlight that FTAI has a perfect Piotroski Score of 9, which suggests strong financial health and operational efficiency. Additionally, analysts are anticipating sales growth in the current year, reinforcing the positive outlook for the company's financial performance. For investors looking to delve deeper into FTAI's prospects, InvestingPro offers even more insights, with a total of 19 additional InvestingPro Tips available on their platform. These tips provide a comprehensive analysis of the company's financial health, stock performance, and market valuation, enabling informed investment decisions.
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