Willis Lease Finance's Q1 2025: Unraveling Contradictions in Demand, Tariffs, and Cost Strategies

Impact of geopolitical instability on demand, impact of industry-wide cost-cutting measures, tariff impact on imported parts and assets, diversification of engine purchasing and origination strategy, and tariff impact on business operations are the key contradictions discussed in Willis Lease Finance's latest 2025Q1 earnings call.



Revenue and Profit Growth:
- Willis Lease Finance Corporation reported total revenue of $157.7 million for the first quarter of 2025, with pre-tax income at $25.2 million.
- Revenue was up 33% from the comparable quarter in 2024.
- Growth was driven by increased core lease rent revenue and maintenance reserve revenues, and the company's vertically integrated services business.

Portfolio Utilization and Asset Purchases:
- The company's portfolio utilization grew from 76.7% at year-end 2024 to 86.4% by the end of Q1 2025.
- This increase was due to the successful deployment of December 2024 purchases of 9 GTF engines from Pratt & Whitney onto lease.
- This deployment enabled quick revenue generation from off-lease engine purchases.

Sustainable Aviation Fuel Project and Costs:
- The company incurred $11.4 million in consultant-related fees, largely linked to its sustainable aviation fuel project.
- Although this amount represents a significant increase, it reflects the majority of expected expenses for the year.
- The increase is due to licensing and engineering fees related to the project's development stage.

Spare Parts and Equipment Sales:
- Spare parts and equipment sales increased by 455% to $18.2 million in Q1 2025 compared to $3.3 million in the comparable quarter of 2024.
- The increase was driven by strong demand for surplus materials as operators extend the lives of their current generation engine portfolios.
- This trend is expected to continue due to the market's tight parts market conditions.