FTAI Aviation (FTAI): Revenue +41%, EPS −28% — Q2 2026

FTAI Aviation Ltd. (FTAI) Q2 2026 — Revenue $953.1M (+41%) beat the ~$895M estimate, but diluted EPS of $1.13 vs $1.57 missed the $1.38 consensus by 18% — a 4th straight miss. Adjusted EBITDA FELL 16% to $291.4M. Aerospace Products did $875.0M of revenue (+78%) and $249.7M of Adj EBITDA (+51%); everything else did $41.7M vs $182.9M, down 77%. FY26 Aviation Leasing guidance cut from $575M to $475M. Dividend raised to $0.50. Shares went $212.47 pre-print to a $179.11 intraday low, closing $197.50. Three things nobody connected. (1) The remainder: total Adj EBITDA $291.4M less Aerospace $249.7M leaves $41.7M for the leasing fleet, FTAI Power and corporate — versus $182.9M a year ago. Q2 interest expense alone was $64.1M, 1.5x that. (2) The balance sheet trade: since December inventory rose $351M to $1.545B (34% of all assets) while leasing equipment FELL $399M to $1.146B. H1 produced $617M of Adjusted EBITDA, debt was flat at $3.45B, and cash rose $37M — the dividend and the inventory build were funded by shrinking the fleet. (3) The hockey stick: H1 non-Aerospace Adj EBITDA was $144.7M, so the cut-to-$475M leasing guide still needs ~$330M in H2, a 2.3x step-up. Street FY26 EPS of $6.59 needs $4.17 in H2 against $2.42 in H1. Shareholders' equity is $404M on a $20B market cap. THE CALL: AVOID (3/5, A GREAT BUSINESS INSIDE A LEVERAGED HOLDING COMPANY) — base-case value ~$145.0 vs ~$197.5 today. KEY METRICS: - Revenue $953.1M +41% (beat ~$895M est); diluted EPS $1.13 vs $1.57, missed $1.38 est by 18% - 4th consecutive EPS miss: Q3'25 $1.10/$1.21, Q4'25 $1.08/$1.24, Q1'26 $1.29/$1.50, Q2'26 $1.13/$1.38 - Adjusted EBITDA $291.4M, DOWN 16% vs $347.8M; net income attributable $117.6M vs $161.7M - Aerospace Products: revenue $875.0M +78%, Adj EBITDA $249.7M +51% (28.5% margin), segment D&A just $4.9M - Everything else Adj EBITDA $41.7M vs $182.9M — down 77%; Q2 interest expense $64.1M is 1.5x that - Lease income $27.8M (-56%), maintenance revenue $25.8M (-65%), asset sales $16.9M (-65%) - Gain on sale to the 2025 Partnership $2.5M vs $34.6M; gross margin 33.3% vs 45.4% - Guidance: FY26 Aerospace $1,050M reaffirmed; FY26 Aviation Leasing CUT $575M to $475M (asset-light) - FY27 segment guide $2.3B = Aerospace $1.4B + FTAI Power $450M + Aviation Leasing $450M - H1: revenue $1,783.8M, Adj EBITDA $617.0M (Aerospace $472.3M), diluted EPS $2.42 vs $2.44 - Balance sheet: inventory $1,544.6M (+$351M since Dec), leasing equipment $1,146.4M (-$399M), cash +$37M - Long-term debt $3,453.3M flat; shareholders' equity $404.0M; net debt ~$3.12B; ~50x book - Dividend raised to $0.50/qtr (4th straight increase); 2026 module target raised to 1,200 from 1,050 What to watch: Watch Q3 Aviation Leasing Adjusted EBITDA in October — the $475M full-year guide needs ~$330M across H2 against $144.7M in H1. North of $150M with the guide held moves fair value toward $175. What breaks it: inventory outgrowing Aerospace revenue again, leasing equipment falling below $1B, or any slip in the FTAI Power delivery schedule. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.