AerSale's Q1 2025 Earnings Call: Unpacking Contradictions in Engine Demand, AerSafe Backlog, and Market Dynamics

Demand for engines and whole asset sales, backlog and demand for AerSafe, demand and supply dynamics for engines, AerAware orders and market demand are the key contradictions discussed in AerSale's latest 2025Q1 earnings call.



Revenue and Earnings Decline:
- AerSale Corporation reported consolidated revenue of $65.8 million in Q1 2025, down 27.3% from the prior year period, excluding whole asset sales, a loss from operations of $6.6 million, and a net loss of $5.3 million.
- The decline was primarily attributed to fewer aircraft in work at its facilities, fewer whole asset sales, and lower leasing revenue from a reduced service offering at Roswell.

Segment Performance and Feedstock Acquisition:
- The Asset Management segment saw sales decline 33.8% due to lower whole asset sales, but excluding them, sales increased 81.7% to $37.5 million.
- The company acquired $43.4 million of feedstock in the first quarter, improving the availability of favorably priced feedstock and increasing its win rate to 10.4%.

MRO and TechOps Performance:
- TechOps segment revenue declined 15.1% to $26.6 million due to the completion of a multi-line customer contract at Goodyear and reducing service offerings at Roswell.
- The company is expanding its component MRO facilities, with accessories and aerostructure shops expected to come online within the next 30 to 60 days, potentially generating new incremental revenue.

AerSafe and AerAware Product Development:
- AerSafe deliveries increased during the quarter, with a backlog totaling $11 million, anticipated to further increase throughout the year.
- AerSale's revolutionary enhanced flight vision system, AerAware, is in active discussions with multiple airlines and government operators, with plans to add ADS-B-in capability to enhance pilot visibility.

Future Outlook and Strategic Initiatives:
- The company expects incremental improvement in results each quarter for the remainder of the year, driven by higher USM sales, an expanding lease pool, new component MRO service offerings, and AerSale backlog growth.
- The strategic focus is on leveraging its strong inventory position and disciplined approach to feedstock acquisitions to drive profitability and growth.