Citi: FTAI Aviation partnership agreement and 2025 guide 'look very encouraging'

Investing.com -- Citi analysts expressed optimism about FTAI Aviation’s recent strategic announcements, highlighting the company’s partnership agreement and 2025 guidance as key drivers for growth. 

FTAI’s shares are up more than 7% premarket after a 2% decline in Monday’s session. 

According to Citi, the announcements and moves could prove to be a "win-win" for both FTAI Aviation and its partners.

FTAI’s new partnership, formed with unnamed third-party institutional investors, aims to acquire narrow-body aircraft, including 737NG and Airbus A320CEO models, on lease from other lessors. 

Citi notes that the initiative provides FTAI exclusivity to conduct engine and module swaps on these aircraft, significantly enhancing its position in the global engine module market. 

The partnership is structured to benefit FTAI’s third-party partners by capitalizing on "today’s attractive aircraft leasing economics," while FTAI will offer aircraft management services for customary, market-based compensation.

A first step in this initiative will be the sale of 46 on-lease narrow-body aircraft, expected to be completed by the end of Q2 2025, with a net purchase price of $549 million, noted Citi. 

This follows the company’s acquisition of 41 such aircraft by the end of Q3 2024, with five additional planes acquired in Q4.

In addition to this strategic partnership, Citi believes FTAI’s guidance for 2025 looks promising. 

The company has projected EBITDA of $1.1 billion to $1.15 billion for the year, slightly above Citi’s estimates. The breakdown includes $600 million to $650 million from the aerospace products (engine module) segment and the remaining $500 million from aviation leasing. 

Citi highlights key assumptions behind this guidance, such as the production of 100 CFM56 engine modules per quarter and aerospace margins that should either match or exceed 2024 levels.

Citi’s overall outlook for FTAI remains positive, with the bank maintaining a Buy rating and a $165 price target on the stock.

Source: Investing.com