管理層發言
Good day, and thank you for standing by. Welcome to the First Quarter 2026 FTAI Aviation Earnings Conference Call. Operator instructions were given. Please be advised that today's conference will be recorded. I would now like to hand the conference over to your first speaker today, Alan Andreini, Investor Relations. Please go ahead.
Thank you, Marvin. I would like to welcome you all to the FTAI Aviation First Quarter 2026 Earnings Call. Joining me here today are Joe Adams, our Chief Executive Officer; David Moreno, our President; Nicholas McAleese, our Chief Financial Officer; and Stacy Kuperus, our Chief Operating Officer. We have posted an investor presentation and our press release on our website, which we encourage you to download if you have not already done so. Also, please note that this call is open to the public in listen-only mode and is being webcast. In addition, we will be discussing some non-GAAP financial measures during the call today, including EBITDA. The reconciliation of those measures to the most directly comparable GAAP measures can be found in the earnings supplement. Before I turn the call over to Joe, I would like to point out that certain statements made today will be forward-looking statements, including regarding future earnings. These statements by their nature are uncertain and may differ materially from actual results. We encourage you to review the disclaimers in our press release and investor presentation regarding non-GAAP financial measures and forward-looking statements and to review the risk factors contained in our quarterly report filed with the SEC. Now I would like to turn the call over to Joe.
Thank you, Alan. The first quarter was a solid start to the year for us, and we'd like to begin this morning by highlighting the key objectives for each of our businesses in 2026 and the progress we made during this first quarter. Across Aerospace Products, Strategic Capital and Power, we are scaling platforms with strong structural demand in a disciplined manner in deploying capital to support growth where we see the most attractive long-term returns. I'll start with Aerospace Products. First, a top priority for us in 2026 is to focus on accelerating our market share growth. As our production capabilities, parts procurement strategies and overall MRO customer adoption reach an inflection point, now is the time for us to take full advantage of our competitive moat and focus on market share growth. As a reminder, we're only five years into building our Aerospace Products business, and as the business continues to mature and grow, we have the opportunity to leverage our enhanced execution capabilities to take more market share more quickly from traditional engine maintenance shops.
Second, as the market for the CFM56 and V2500 engines continues to mature, we've seen a notable increase in demand for leased engine solutions from top-tier airlines, even those with in-house engine MRO capabilities. We offer flexibility, customized pricing and scale that no one else can fulfill, and these large programs are very sticky. It's a key priority for us in 2026 to win more of this business. Third is production. We've always talked about expanding production capacity well ahead of growth as well as adding maintenance facilities in parts of the world where we see strong traction with our customer base. It's notable today that when you look at the map, we have no major maintenance facilities east of Rome, Italy. I'd expect this to look different when we are in next year's first quarter call. Turning to results. Aerospace Products results support the objective I just outlined with top-line revenue growth accelerating both year-over-year and quarter-over-quarter, up 104% year-over-year and 32% quarter-over-quarter, respectively.
First quarter adjusted EBITDA of $223 million is an increase of 70% year-over-year and up 14% from $195 million in Q4 of 2025. EBITDA margins for the quarter of 30% are indicative of an increased mix of deals with large airline customers and a larger mix of full performance restoration shop visits. We expect this to be the trend line going forward as our capabilities have been built out, and we're able to bring volumes to the market that others simply cannot. Shifting now to Strategic Capital, where our top priority is completing the deployment of the 2025 SPV, or special purpose vehicle. Our deployment pace for the first vehicle has been strong, and our engine maintenance-focused approach to adding value to aircraft ownership has been well received by the market. As we approach the end of the second quarter, the 2025 SPV will be fully invested, and we will shift from the deployment period to the harvest period where quarterly distribution will now begin.
David will share more with you about the goals for adding value to the portfolio during this phase. As an active asset manager, we're always pursuing ways to enhance the returns above what is the contractual lease stream. Our second area of focus for Strategic Capital is the launch of the 2026 SPV. We continue to plan to have a first close at the end of the second quarter, and we'll start acquiring aircraft in the third quarter of this year. The investment strategy, 12- to 15-month deployment period and size of the vehicle will be consistent with the 2025 vehicle. Last, to support the build of the Strategic Capital business we've added to the team and now have over 40 dedicated individuals focused on sourcing, underwriting and servicing the portfolio across offices in Dublin, Dubai, Cardiff and New York. The growth ambitions and differentiated strategy around engine maintenance has resonated in the market and we've been able to attract great talent to supplement our existing team and scale the platform.
Finally, the FTAI Power business continues to make strong progress towards its commercial launch in the fourth quarter of this year. This week, we signed an important joint venture agreement with the Jereh Group for packaging and customer conversions that are in advanced stages, both of which David will share more details about shortly. Before I pass it over to David, I want to address the conflict in the Middle East that began at the end of February and the broader geopolitical environment our industry is navigating today. We are hopeful for a peaceful resolution and a return to more normal energy trading and prices but we're also realistic about some of the challenges of today's environment. Beginning with Aerospace Products, our exposure to the Middle East is limited. Less than 3% of our global current-generation narrow-body fleet is based in the region, and we have very little customer exposure.
More generally, we've not seen any meaningful change in shop visit demand to date. That said, elevated oil prices and fuel prices do negatively impact our customers' financial situation, and while this can create some volatility, it's the exact environment where our FTAI value proposition becomes even more critical to the customer. When an airline is facing a multimillion-dollar engine shop visit in comparison to a faster, lower-cost engine exchange with FTAI, the decision is even easier to make when liquidity is top of mind. It's also worth remembering that airlines cannot meaningfully change their fleets in response to short-term volatility. New aircraft orders are locked in for the next four to five years, and the current generation aircraft will continue to be a vital part of the global fleet for many years. In short, market share gains in Aerospace Products are much more consequential to us compared to overall market growth.
For Strategic Capital, periods of volatility create investment opportunities; when liquidity is tight, sale-leaseback transactions help raise funds and avoid future shop visits. As the only lessor in the world that covers all engine maintenance for its aircraft portfolio, we are uniquely positioned to help airlines in this matter. And lastly, for Power, our business is largely insulated from the geopolitical dynamic today. The MOD 1 product runs predominantly on natural gas. To the extent we see additional aviation retirements, that will just provide additional feedstock to grow our conversion efforts. So I will now hand it over to David Moreno.
Thanks, Joe. I will start by providing an update on Aerospace Products production. We refurbished 270 CFM56 modules this quarter across our four facilities, an increase of 96% compared to Q1 2025. This is a good start to our 2026 production goal of 1,050 modules and continues to reflect the hard work of our fast-growing team. As Joe mentioned, we have built a strong Aerospace Products foundation over the last five years, and we are ready to further accelerate our market share growth. From a commercial perspective, we are seeing customer engagements expand to larger, more programmatic partnerships as airline adoption accelerates. This is driven by both the overall market tightness as well as FTAI's capabilities continuing to broaden to now include engine and module exchanges, engine leasing and aircraft leasing. We can't emphasize enough the stickiness that's created as our relationships with airlines and asset owners expand.
We become a solution provider that is integrated into the operational plans for the airline's future growth. Our close relationships with airline customers is something we are very proud of, and we believe this will continue to accelerate our market share in the years to come. Next, I'll share a further update on our Strategic Capital. To support the full deployment of the 2025 SPV, we upsized the vehicle's warehouse debt facility at the end of March, adding $1 billion of committed capacity. This facility is now $3.5 billion in size across ten lenders, creating a strong roster of partners for our significant debt capital needs in the business going forward. As we mentioned last quarter, capital deployment for the 2025 vehicle is largely complete. We have closed 165 aircraft as of the end of Q1. And after we sign a few LOIs that are in process, all new future aircraft will go into the 2026 SPV.
With the 2025 SPV transitioning from investment mode to harvest mode, we are very focused on maximizing the value of potential cash flows for our investors. We do this through active management of maintenance events, both airframe and engines as well as through lease extensions. We continue to see strong desire from our airlines to fly current-generation aircraft as long as possible, especially when they do not have to worry about engine shop visits. Our all-in-one solution of combining leasing and engine maintenance has resulted in many lease extensions, and we believe this will continue to be an important trend in the portfolio. Finally, on FTAI Power. I want to share updates on the timing of our commercial launch, our packaging integration and progress with customers. First, we remain firmly on track to commercially launch the MOD 1 in the fourth quarter and our prototype testing is actually running ahead of schedule.
We have completed all the major mechanical testing milestones, including testing our redesigned MOD 1 fan stage at synchronous speed and we expect to wrap up final testing in the third quarter. The results to date have exceeded our expectations. We have been also hosting customers on-site to observe the MOD 1 prototype directly, and that has become an important part of how we sell this product. Second, as Joe mentioned, we signed a joint venture agreement with Jereh Group, one of the leading packagers for mobile gas turbines. This is a foundational step for the program as Jereh will be our primary partner responsible for taking our turbine and combining it with the mobile package that includes the key components like the generator and gearbox. Through the joint venture, we will draw on Jereh's manufacturing footprint across the United States, the UAE, Canada and China, which gives us scale, geographic reach and a clear path to global product rollout.
The joint venture de-risks our supply chain, accelerates our speed to market and aligns the incentives of both parties across the long-term success of the platform. Third, we are building a customer base committed to the long-term deployment of the MOD 1. The customer momentum we discussed last quarter has accelerated meaningfully. We are indeed in active negotiations with leaders across the energy and digital infrastructure landscape, and every one of these deals is anchored by a long-term service agreement, or LTSA, on the turbine. One exciting element is that customers are coming to us with a range of commercial structures in mind from outright purchase to lease, which speaks to the flexibility of our model and the strength of the underlying demand. The interest in lease structure in particular fits naturally with our Strategic Capital initiatives and gives us the ability to offer customers a sought-after leasing solution while preserving capital efficiency.
Several of these conversations are framed around multiyear, multi-block deployment plans, which gives us visibility well beyond 2027. Last, what has resonated most with customers is the maintenance model. The ability to swap a turbine in place in just two days rather than taking the unit offline for an extended overhaul is a capability that the power industry has not had access to before, and it translates directly into a lower levelized cost of energy, or LCOE, for the customer. Based on these conversations as they stand today, we expect to be mostly sold out of our 2027 target production in the near term with a meaningful portion of 2028 spoken for. Before I hand it over to Nicholas, I want to take a moment to congratulate him on his promotion as CFO; as well as Mike Hasan on his promotion to CIO. Both Nicholas and Mike have been key contributors to our operational success and in their new leadership roles they are positioned to have a large impact on our future success. With that, I'll now hand it over to Nicholas to talk through the first quarter numbers in more detail.
Thanks, David. The key metric for us is adjusted EBITDA. We started 2026 with adjusted EBITDA of $325.6 million in Q1 of 2026, which represents a 17% increase compared to $277.2 million in the fourth quarter of 2025. The $325.6 million EBITDA number was comprised of $222.6 million from our Aerospace Products segment, $153 million from our Aviation Leasing segment and negative $50 million from Corporate and Other, including interest, segment eliminations and start-up expenses associated with our Power initiatives. Aerospace Products delivered another good quarter with $222.6 million of EBITDA and an overall EBITDA margin of 30%. This is up 14% sequentially from $195 million in Q4 of 2025 and up 70% year-over-year compared to $131 million in Q1 of 2025, reflecting continued momentum from production growth and operating leverage. Turning to Aviation Leasing. The segment continued to perform well, generating approximately $153 million of EBITDA in the first quarter.
This included $45 million of insurance recoveries, $12 million in gains on sale, $25 million from 2025 SPV management fees and co-investment returns and $71 million from leasing assets held on our balance sheet. For insurance recoveries, in addition to the $45 million recognized in the first quarter, we continue to expect approximately $5 million to be settled later this year, consistent with our previously communicated $50 million for 2026. When combined with the $65 million recovered during 2024 and 2025, this brings total recovery since the outbreak of the war in 2022 to approximately $115 million against the $88 million we rolled off in 2022. For gains on sales, we began the year with $127.5 million in asset sale proceeds, generating a 9% gain or $12.1 million, as we closed the first 9 of 14 aircraft expected to be sold to the 2025 SPV this year and divested several noncore assets during the quarter, including airframes and an Orbi211 engine.
Overall, as we continue to launch new Strategic Capital vehicles on a programmatic basis, we expect the mix of leasing EBITDA to increasingly shift towards Strategic Capital-driven earnings as we further pivot away from balance sheet aircraft leasing and toward a more capital-light fee-driven asset management model. This shift in our business model is also driving continued improvement in our financial profile. We began the year at approximately 2.3x leverage on an annualized basis, now below our targeted range of 2.5 to 3x agreed with our rating agencies, meaningfully lower than the leverage levels of approximately 5x in 2022 and 4x in both 2023 and 2024 before we pivoted to an asset-light strategy. In April, we also upsized our revolving credit facility from $400 million to $2.025 billion and extended the maturity of the facility through 2031 on improved pricing terms, providing FTAI with a long-term source of liquidity.
The facility was significantly oversubscribed and is supported by a diverse syndicate of 15 lenders, including several institutions that also finance the debt facility of our 2025 SPV. As we continue to scale our asset management platform, this alignment across financing relationships enhances flexibility, lowers our cost of capital and delivers tangible financial benefits to the public company. Finally, in the first quarter, we generated $158 million of adjusted free cash flow, reflecting several strategic investments made early in the year to position the business for further growth in 2026. These included approximately $75 million in prepayments under our multiyear CFM56 parts agreement with the OEM, approximately $81 million in induction prepayments for V2500 engines, where demand for full performance restoration remains strong, and $19 million of incremental inventory for FTAI Power to build working capital in support of a targeted 100-unit production run in 2027.
Excluding these growth investments, adjusted free cash flow for the quarter totaled approximately $333 million, reflecting the strong underlying cash generation capability of the business. With that, I'll hand it back over to Joe for final remarks.
Thanks, Nicholas. I'd like to reiterate how encouraged we are by the start of 2026. Despite a dynamic geopolitical backdrop, demand across our customer base remains robust, execution across our three platforms is extremely strong and the strategic investments we're making today position FTAI well for continued growth in 2027 and beyond. While developments in the Middle East remain fluid and could present both challenges and opportunities, we continue to see strong underlying fundamentals across our business and a durable competitive advantage in all of our platforms. Consistent with our view, we reaffirm our 2026 total business segment EBITDA outlook of $1.625 billion, comprised of $1.05 billion from Aerospace Products and $575 million from Aviation Leasing supported by growing and accelerating demand across our proprietary aerospace offerings. Based on this outlook, we also remain confident in our expectation to generate approximately $915 million of adjusted free cash flow in 2026, which reflects continued execution against our annual production plan of 1,050 CFM56 modules to meet customer demand while prioritizing excess cash flow for reinvestment in high-return growth initiatives, including M&A, minority investments in the 2026 SPV and the continuing development of FTAI Power.
As a result of this confidence for the third consecutive quarter in a row, we're announcing an increase to our dividend from $0.40 per quarter to $0.45 per share per quarter. The dividend will be paid on May 26 to shareholders of record as of May 13. This marks our 44th dividend as a public company and 59th consecutive dividend since we started. As we look ahead to the rest of 2026, our focus remains on building a durable, scalable and differentiated platform that delivers value over the long term. The investments we are making across Aerospace Products, Strategic Capital and Power are designed to strengthen our competitive position, expand our addressable markets and support sustainable growth for many years to come. And I want to recognize the teams — fabulous teams — across our organization for their continued focus on execution and delivery in a demanding operating environment. And I also want to thank our customers and partners for the trust they place in FTAI as we help them navigate capacity constraints and rising demand and our shareholders for their ongoing support as we continue to scale our business. We are focused on executing against the opportunities in front of us and remain confident in FTAI's ability to deliver. With that, I will pass it back to Alan.
Thank you, Joe. Marvin, you may now open the call to Q&A.
分析師問答
Operator instructions were given. Our first question comes from Sheila Kahyaoglu of Jefferies.
Nice quarter. I have two questions, if that's okay. First one is on Aerospace Products. Market share continues to climb higher, up from 10% to 12% while the margin rate is healthy, but has taken a step back. Can you maybe talk about some of the puts and takes? How much came from higher work scope versus the market share in new customers?
Yes. We really don't have a specific breakout of the components. It's really a mix of things that go into it. And as we mentioned previously, as the customers get bigger, the potential orders get bigger, the work scopes get bigger. We are consciously going for a higher market share and to drive faster growth in EBITDA in an absolute dollar amount. And we think that moves the needle much more than anything else and really the opportunity to take advantage of this scale that we have today and really capture as much of the market as possible is something that we've been working hard to get ourselves in a position to be able to do for years, and we feel like we're there at this point.
Yes. And this is David to add to that. I think as Joe mentioned, the scale is intentional. It's obviously intentional on Aerospace Products, but it's also intentional across the value it creates on our entire business, including Strategic Capital and Power. So when we think about value creation, there's no better lever than increasing market share for us as a top priority.
Great. And then maybe, David, you mentioned much of the 2027/2028 modules should be committed to in the near term. Can you give us some flavor of what your customer set looks like and the underlying assumptions in terms of volumes and packaging capability as you get into the 2028 time frame?
Yes. So we've made meaningful progress with customers. As I mentioned, we've had customers on site as well to look at the prototype, understand that. I think that's a very important piece of the sales process. To give you a little more color, the customers really consist of four types of customers: number one, hyperscalers; number two, data center operators; number three, gas distributors and number four, financial sponsors. There's a lot of activity from financial sponsors who are providing capital in this space. We feel very good about being where we're at and we expect to be, as I mentioned, in a short matter of time sold out of 2027 volumes. The conversations we're having are beyond 2027; they're multiyear, multi-block conversations. So we're talking about orders into 2028 and beyond. And I think that's a very important piece: when we built this, we wanted to create a diverse group of customers, really with the intention of having them operate this base load for the long term. And I think we have seen that, and we're very happy with the progress. As I mentioned, I think we're kind of in the final steps here, and we hope to update you guys shortly.
Our next question comes from the line of Ken Herbert of RBC.
Joe and David and Alan and Nicholas. Maybe, Joe or David, can you just talk a little bit more about the relationship with your JV partner, Jereh Group? And maybe how that came about, why you picked them and the value they uniquely bring to this FTAI Power opportunity?
Yes, Ken. We're very excited about our partnership with Jereh Group. They're one of the largest oil and gas equipment manufacturers in the world. What they're going to be doing with us is handle everything except the turbine. That means the actual trailer, all the key components on the trailer, including the generator, the gearbox and all the controls. That will allow us to focus on the MOD 1, which is our specialty around the turbine. We selected Jereh because of their scale in manufacturing; they have manufacturing facilities across the U.S., Canada, the UAE and in China, so that scale is obviously an important theme. They have a lot of experience with aeroderivative packaging for customers of companies like GE, Baker Hughes and Siemens, and they can create a lot of value in everything but the turbine. So I think it's a really good marriage between both companies, and we have shared incentives to continue to work and scale this business together.
Does the work with Jereh at all impact sort of your access to the post-sales economics and the ways to monetize FTAI Power, around maintenance and spare parts?
I would say there's no real change to how we've talked about economics. The overall unit economics will remain roughly the same and in line with prior expectations. A part of this will come through a joint venture, so the way that it appears on the face of the financials may be a little different, meaning revenue may be slightly lower and then we'll have an earnings piece through the joint venture. But overall, the unit economics remain the same. As part of Jereh handling the packaging, we'd have to invest less in working capital around the packaging piece of the equation, which is a benefit. They're best in class; they can package at scale and they're vertically integrated. So they add a lot of value there. This does not have any impact on our overall margins. And as we've talked about, we're obviously very focused on the long-term service agreement when we talk about economics to FTAI on the turbine.
Customers will pay us to service the turbine, which is similar economics to our Aerospace business, where customers will pay us based on usage. Depending on usage, every three to six years turbines will need attention, and we're going to handle that through our exchange business, which we're very excited about. We can replace these turbines in two days or less, and typically the lead times for maintenance on turbines are longer than in the aerospace business, so we think that's a huge competitive advantage as well as an important revenue stream.
Our next question comes from the line of Kristine Liwag of Morgan Stanley.
Maybe, David, since you're talking about Power, I just want to touch a bit more on some of the things you said. So I just want to clarify, when you said that you're mostly sold out for 2027, does this mean that these things are accounted for and you're just waiting for ink to dry on the orders? That's the first question. And also the second question, can you provide more color in terms of how your interactions are with these hyperscalers? What's important to them? When you talk about being able to service these turbines in a shorter period, is that a key differentiator? Are they valuing this? And ultimately, how competitive is your offering to what they're considering right now?
Yes. We're in advanced negotiations. I'd say we're in the final steps, and we expect to be sold out imminently. As far as hyperscalers, what differentiates our product and what's important for our customers is three things. Number one is speed to power — customers want units now and there's a shortage of equipment. Our unit is mobile and it can be installed in less than two weeks, which is a big advantage versus EPC or construction that could take up to 18 months. Number two is scale. Between our ability on the turbines and Jereh's ability on packaging, we have scale that no one else has today. Number three is reliability of the product, which includes the durability of the turbine and the servicing model. If you can service a unit in two days versus six months, you need fewer units and you have lower operating costs. All of that is very important and the customers are very excited about the MOD 1. We've been thoughtful about building the customer base for the longevity of the platform, not just for 2027.
Our next question comes from the line of Giuliano Bologna of Compass Point.
Congratulations on the continued impressive results in the scaling of the business. The one thing I'd like to focus on is the real acceleration in the module count — producing 270 this quarter. Can you tell us more about what's driving that acceleration in module production because it seems like a pretty impressive acceleration in your production volumes? And be curious about the durability and where things should go from there versus your stated targets for the year.
We're proud of the execution from the team. As we said all along, we've been really focused on execution, and that includes adding capacity, which we've done. Number two is the people; we've been focusing on adding the right people and we've talked about the training academy so that continues to be humming. And then obviously, number three is execution. So we're very excited. That's playing out in the numbers: we went from 138 modules in Q1 2025 to 270. That's a dramatic increase year-over-year. I would point out that Rome and Lisbon are still ramping up, so we see a lot of momentum from those facilities and a lot of growth coming. We continue to look for additional capacity east of Rome, which is a key priority for the business. We want to get well ahead of capacity as we continue to go for market share.
And I think also having a parts supply deal from the OEM helps us scale as well, and that's a huge provider of parts — you need parts, people and facilities to build an engine. We've concentrated the last year on all three of those, and the result is we're able to double production year-over-year.
Our next question comes from the line of Josh Sullivan of JonesTrading.
Just wanted to touch base on the conflicts in the Middle East. I know your exposures may be limited. But if this is a projected broader event, given the cost-saving tools that FTAI offers, are you seeing any early conversations with new customers who might feel they're exposed and are preparing?
When you get into these environments, liquidity becomes the top priority for airlines. Any time that happens, you start seeing increased sale-leaseback opportunities, asset sales and actions to avoid engine shop visits. So yes, it's a direct result: priorities change for airline customers and we're there to partner with them. We've done this in past crises, like COVID or other geopolitical events. We're flexible, we have access to capital, and we work with clients to figure out what they need rather than taking an adversarial approach. It's a partnering approach, which has worked very well.
It's still early, so we're not seeing a meaningful increase in assets for sale yet. As Joe mentioned, we want airlines to do well — the industry is better when airlines are doing well — but we're well prepared with the tools that we have. The ability for us to do a sale-leaseback with engine management has two benefits: day one you create liquidity and day two you avoid expensive shop visits. We're 1-of-1 that can execute at that scale, so while it's early, we're prepared to help when the time is right.
In the beginning you may see some operators take older, high-cost, low-revenue aircraft out of service, like some A340s, 747s or certain regional jets. But core fleets that are needed to operate schedules are planned over multiple years and replacement capacity is difficult to secure. We've seen such a tight market that we don't expect much change in core fleet operations in the next few months even if the situation continues.
Our next question comes from the line of Brandon Oglenski of Barclays.
Joe, can you speak a little bit more on the customer profile of these larger airlines that you had in the quarter? And looking forward, as you seek to get more market share here, I think this might actually be very much a validation of the model that you have here. Could you elaborate?
If you think back 12 to 18 months, some of the big airlines might have been dismissive. Now, virtually everyone in the world is a potential customer, if not an actual customer. The reason is simple: you can tell an airline what you think they'll spend to rebuild an engine, and we'll match or beat that price and remove all the expenses and risks they have to manage, like spare engines and engineering departments and cost-overrun risk. When airlines hear that, they ask why not use this product at least for a portion of their fleet. Then the conversation becomes, if you like it for 10% of your fleet, why not 100%? We have conversations where we acquired aircraft leased to an airline and the airline's reaction is, 'Great news. You never have to do another engine shop visit on that fleet ever again.' They then ask us to expand the relationship to manage more of their fleet. Ultimately, virtually every airline in the world is an actual or potential customer.
And Nicholas, congrats on the new role. You improved liquidity with a larger revolver, but also enhanced the warehousing facility on the SPV. Is that correct?
Thanks, Brandon. It's important to clarify that the two facilities are independent from each other. The revolver is related to the public company and is the primary source of liquidity. The warehouse upsizing was related to closing out the deployment of capital for the 2025 SPV, where we tracked about a $6 billion number. That said, we do have lenders in both facilities and as we become a larger player in managing SPVs, we're seeing financial benefits across these relationships. We're pleased with the outcome because it allowed us to improve terms on the public company revolver as we become a much larger participant in the SPV activity.
Can you put that in context of your expected capital commitments or capital cost at the corporate level looking out the next year or two?
For the first SPV, we have 19% of the $2 billion that we closed earlier in the year. The capital call for that has approximately $95 million remaining as of 3/31. We do expect that to be called by Q2, and that will fully close that vehicle. As a reminder, the 2025 SPV is a closed-end fund — once we commit that capital, we'll switch from investment mode to harvest mode and start distributions back to all institutional LPs, including FTAI for its 19% share. Related to the 2026 SPV, we are actively in the equity fundraising mode, so we expect to deploy capital in the second half of the year. The timing will ultimately relate to the cadence of the equity close.
Our next question comes from the line of Brian McKenna of Citizens.
Okay, great. There's clearly a lot of noise across private credit today, although most of that is within corporate direct lending. What are your dialogues like today for SPV 2? We've been hearing that institutional allocators continue to deploy capital in a big way across private credit despite all the rhetoric out there, specifically into asset-backed finance opportunities. So I'm curious what you're seeing on this front. And then from your seat, what's ultimately driving such strong demand for your product?
Ultimately, it's returns. We're not seeing any impact from what private credit may be experiencing elsewhere because our investors are committed into private equity-style, nonredeemable structures, so it has no impact on our ability to raise capital. Investors like uncorrelated, asset-based returns with high contractual cash flows — that's our sweet spot. We can show higher return with lower risk because of our engine maintenance exchange program: higher returns than traditional approaches given our model and lower residual value exposure. Investors in the first SPV invested with the idea of a program, and they've seen great returns so far, so they're committed to continuing to invest.
That's helpful. You're building a great network of alternative asset managers and institutional allocators for the SPV, but many of these large investors also own or are invested in data centers and energy-related infrastructure. Is there an opportunity to leverage some of these relationships on the SPV side to further enhance the adoption and distribution of your Power product over time?
Absolutely. We've talked about demand for long-term leasing and contracted cash flows. Our capital partners want to invest in these types of assets, and we feel very good about being able to scale that. It's a capital-efficient way to do so and we expect to leverage those relationships to scale the Power product.
It further differentiates our product because most equipment sellers don't offer financing. On the Power side, like aviation, we can sell, lease or offer a power purchase agreement — you tell us what you want. That financing flexibility is extremely well received and is a perfect structure for an SPV-powered vehicle.
Our next question comes from the line of Shannon Doherty of Deutsche Bank.
First one for Nicholas and congratulations on your new role. After the additional $5 million of expected insurance proceeds this year, will you be completely finished with the insurance claims?
Thanks, Shannon. Yes, that's correct. We settled $44.6 million in Q1, of which we received $27 million in cash proceeds with the balance to be received in Q2. The remaining $5 million is consistent with our original guidance of $50 million. After that, we will be done and closed on the insurance claims related to that matter.
Great. And for my second question, any update on the progress of getting the remaining PMA parts approval — we all know that parts inflation is an issue for everyone in the industry right now. Maybe you can provide us with more color on levers that you can pull to manage costs?
Sure. There are five parts in total that our team has been working on; three are approved. Those three represent about 80% of the total cost savings. The last two parts are in process to get approval as well, but the majority of the cost savings is already available in the market through the approved parts. So we're continuing to advance approvals and leverage the PMA parts as they come online to manage costs.
Our next question comes from the line of Myles Walton of Wolf Research.
This is Greg Dalberg on for Myles. I have a quick follow-up on Giuliano's question regarding module production. I wanted to focus more on Miami and Montreal specifically just because it looks like Montreal is down sequentially in 1Q and Miami was well above the full-year run rate. So can you talk about the dynamics specifically in 1Q and how those play out through the year?
Sure. Montreal is our most mature shop, which means they're going to handle the heaviest work scopes. Production mix is truly based on work scope. Montreal is doing heavier shop visits while Miami is doing a bit lighter work scopes, and Rome and Lisbon are currently doing the lightest work scopes. As Rome and Lisbon ramp, we expect continued growth across the network.
Got it. And then a quick one for Nicholas: given the corporate expense in 1Q embedded some of the Power costs, can you talk about the full-year expectation?
We had approximately $10 million in incremental expenses related to Power in Q1; that's R&D expense and incremental headcount for engineers, technicians and support staff. On an annualized basis for 2026, you can assume slightly less incremental expense for the remainder of the year as some costs were one-time. In future years, as we scale toward a 100-unit production target, we will increase headcount and those expenses will grow. Some early phase costs hit the P&L immediately rather than being capitalized. By 2027, we expect Power to be a separate reporting segment, and those expenses will be allocated to the Power business at that point.
But probably in 2027, Power will be a segment and we will not have its expenses in Corporate. It will be a sizable business and we will attribute those expenses to the Power segment at that point.
Our next question comes from the line of Andre Madrid of BTIG.
This is the first quarter in a while that I can remember where we didn't see some kind of acquisition being announced. Obviously, capital deployment remains a priority. Could you give more color as to what the M&A pipeline looks like? Maybe not too deep in the details, but color around scale and maybe geographic location and capability would be helpful.
I didn't realize we'd built an expectation that we'd announce an M&A every quarter. We have activity in two categories. One is adding capacity to the overhaul business. We did allude to another facility east of Rome in the Middle East by this time next year, and we have candidates we're working on. Timing is often hard to control in M&A, but we've been disciplined and when we find the right asset and structure we can move quickly. The second area is piece-part repair and part manufacturing. We have several opportunities in that space as well. We want to vertically integrate where it reduces the cost of overhauling and building an engine. Last year we added Pacific Aerodynamics and Prime through the Bauer partnership. We'll keep looking and hope to add additional capability in repair and piece-part manufacturing in the future.
I see no further questions at this time. I would now like to turn it back to Alan Andreini for closing remarks.
Thank you, Marvin, and thank you all for participating in today's conference call. We look forward to updating you after Q2.
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.