FTAI Aviation (NASDAQ:FTAI) used its fourth-quarter 2025 earnings call to highlight a year of expansion across aerospace products, aviation leasing and new growth initiatives, while also raising its 2026 earnings outlook and increasing its dividend for a second consecutive quarter.
Strategic Capital Initiative expands and a second fund begins fundraising
Chief Executive Officer Joe Adams said 2025 was a “defining year,” pointing first to the launch of the company’s Strategic Capital Initiative (SCI), which raised a fund focused on acquiring midlife Boeing 737 NG and Airbus A320ceo aircraft. Adams said investor demand was “exceptionally strong,” including FTAI’s own 19% co-investment, and that SCI One secured $2 billion in equity commitments in 10 months. With financing partners Atlas (an affiliate of Apollo) and Deutsche Bank, management said SCI One will invest $6 billion in total capital.
Management also announced the fundraising process has begun for SCI Two, supported by an anchor equity commitment. Moreno said FTAI expects to start investing out of SCI Two by June 30. In the Q&A session, Adams said the company would likely launch SCI Two at around the same $6 billion size as SCI One, reiterating an ambition to become the world’s largest manager of midlife narrow-body aircraft.
Aerospace products results, market outlook, and margin drivers
Adams said aerospace products delivered “great momentum,” with fourth-quarter adjusted EBITDA of $195 million at a 35% margin. He said this was up about 66% year-over-year and up 8% sequentially from $180 million in the third quarter. For the full year, aerospace products adjusted EBITDA totaled $671 million, which management said was within its upwardly revised target range of $650 million to $700 million.
Adams attributed growth to demand for the company’s fixed-price engine exchange offerings as an alternative to traditional shop visits for CFM56 and V2500 engines. He also pointed to broader market dynamics, including airlines extending the life of existing fleets, low retirements, and maintenance spending expectations increasing to roughly $25 billion per year from a prior $22 billion projection. Adams said the company remained on track for an interim goal of 25% market share.
Operationally, FTAI said it refurbished 228 CFM56 modules in the fourth quarter across three facilities, up 68% from the prior-year period, and produced 757 modules for the year, exceeding its 2025 target of 750. Moreno said the company raised its 2026 module target to 1,050 from 1,000, representing 39% growth versus 2025.
Management also discussed margin levers. In response to a question on moving from mid-30% margins toward 40%, Adams cited three main factors:
- Approval of a PMA high-pressure turbine blade.
- Expanded access to lower-cost parts supply, including used serviceable material and a materials agreement with CFM that includes parts and repairs.
- Continued buildout of piece-part and component repair capabilities, including investments in Pacific Aerodynamic and Prime Engine Accessories, as well as added repair capability in Montreal.
Adams said the company was confident it had the capability to reach 40% aerospace products margins in 2026, while adding that FTAI would prioritize accelerating adoption and expanding its customer base if that generated greater EBITDA, even if it meant less emphasis on incremental margin percentage.
FTAI Power: inventory build, production timeline, and customer engagement
Moreno detailed progress on FTAI Power, a platform to convert CFM56 engines into aeroderivative power turbines aimed at meeting growing electricity needs tied to AI data centers. He said the company is adapting the CFM56 platform to deliver a 25 MW unit, with a value proposition centered on speed and flexibility.
Moreno outlined five focus areas for the power initiative—feedstock and working capital, facility readiness, procurement strategy, customer engagement, and timing—and said the company is targeting about $250 million of working capital to support turbine feedstock and a rotable pool of key components. He said inventory increased by about $150 million in the fourth quarter to secure additional turbines to support a 2026 production ramp.
FTAI said it began retrofitting its Montreal facility to establish a dedicated production line for power, emphasizing that aerospace and power components must remain separate for regulatory and asset integrity reasons. Moreno said the Montreal workforce grew from about 360 employees at the beginning of 2025 to 570, and the company’s training academy enrolled 220 trainees and was graduating over 50 per quarter.
On timing, Moreno said the first production units of “Mod-1” are expected to be delivered in the fourth quarter of 2026, and management reiterated a target of 100 units of production in 2027. In the Q&A, Adams said the unit is expected to produce 25 MW with an estimated 35% to 40% efficiency and a roughly 9,000 heat rate, which he characterized as comparable to other aeroderivative offerings. Management said it continues discussions with hyperscalers and data center operators but is not providing specific commercial details at this stage. Asked directly about the order book, Adams said the company would provide updates when appropriate and indicated it was being strategic about long-term deployment structures.
2025 financial details, 2026 guidance update, and dividend increase
Chief Financial Officer Angela Nam said fourth-quarter 2025 adjusted EBITDA was $277.2 million, up 10% year-over-year. She said the quarterly total included $195 million from aerospace products, $113.2 million from leasing, and negative $31 million from corporate and other, including startup expenses related to the power initiative.
For the full year, Nam said adjusted EBITDA was $1.2 billion in 2025, up 38% from $862 million in 2024. Leasing segment adjusted EBITDA was $609 million, slightly above the company’s $600 million target, and included $54 million from Russian insurance claim recoveries. Nam also said year-end leverage was 2.6x, at the low end of a 2.5x to 3x target range, and that the company received two-notch upgrades from both S&P and Fitch, achieving a “strong BB rating” across all three agencies.
Management also discussed cash flow and investments. Nam said adjusted free cash flow for 2025 was $724 million, compared with original guidance of $650 million and revised mid-year guidance of $750 million, and she highlighted fourth-quarter investments including $52 million of additional SCI co-investment, $150 million of turbine inventory for power, and $50 million for hot section parts for the engine maintenance business.
Looking ahead, Adams said FTAI increased its 2026 outlook by $100 million of total EBITDA, split evenly between aerospace products and leasing. The company now expects total segment EBITDA of $1.625 billion, up from $1.525 billion, including:
- $1.05 billion from aerospace products (up from $1.0 billion)
- $575 million from aviation leasing (up from $525 million), primarily tied to insurance settlements related to Russian asset recoveries
Adams said the company still expects to generate $1 billion of free cash flow, but after incremental investments, it now forecasts approximately $915 million of 2026 free cash flow. He cited increased SCI investment tied to SCI Two and additional power working capital. Nam added that the company expects $1.2 billion in free cash flow before new growth initiatives, with the revised EBITDA outlook and earlier SCI One capital calls influencing the 2026 cadence.
FTAI also raised its quarterly dividend to $0.40 per share from $0.35, payable March 23 to shareholders of record March 13. Adams said it would be the company’s 43rd dividend as a public company and its 58th consecutive dividend since inception.
About FTAI Aviation (NASDAQ:FTAI)
FTAI Aviation (NASDAQ: FTAI) is a commercial aircraft leasing company that acquires, manages and leases wide-body jet aircraft to airlines globally. The company’s portfolio is focused on modern, fuel-efficient Boeing models, including the 767, 777 and 787 families, which are deployed under long-term operating leases. By concentrating on in-demand wide-body assets, FTAI Aviation seeks to deliver stable cash flows through lease rentals and maintenance reserve collections while providing airlines with flexible fleet solutions.
In addition to lease origination, FTAI Aviation offers end-to-end asset management services.
