AL - Earnings call transcript Q3 2017

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Operator

Good day, ladies and gentlemen, and welcome to the Air Lease Corp.

Third Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only-mode. Later we will conduct a question-and-answer session, and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call may be recorded. to of conference Investor like Liz to now Head DePalma, Relations. would turn over the Mary I

You may begin.

Mary Liz DePalma

today, statements other for replay any the XXXX this and today, quarter available Financial recorded detailed Air results. competition are Before assumes Instructions] future actual is future conference of Thank Please and and forward-looking our possessions of you. joined to or conference events. to Chairman, at statements release represent to expense. X, earnings Vice third John Corporation's Executive the be to or this Greg of in may obligation estimate and refer Lease that A copy Securities the please on and Exchange statements performance Air XXXX. our begin, and in management's Officer. Good light certain estimates of Securities answers with operating includes, we afternoon, third for Hazy, and without within Act. quarter for statements we and These expenses Chief statements the This results. President Thursday, everyone, information Willis, call today, could X, a and afternoon results our by future to call, Plueger, published questions, description meaning no our limitation, our for regarding our our our materially differ that on and our involve earnings Private of our risks more is and expectations. Liz our website. call update www.airleasecorp.com. information President; from only certain webcast Corporation DePalma, will operations Mary factors XXXX, that revenues, welcome and Earlier earnings Commission forward-looking results section risk Steve Lease affect performance, [Operator Litigation the uncertainties filings cause and of being income including Chief November your note I'm of and November Reform expenses, the This This is Executive investors These as webcast stock-based company's the future Officer XXXX. website billable speak Executive

measures as In GAAP measures the call, as the them both earnings this income non-GAAP reasons measures. corresponding will Mr. is A and can website release using our these pretax at during can be per of the section addition, be in President, of adjusted for John and call certain well utilizing share adjusted be like are would equity such permitted. I before return turn to we and definition not found financial recording taxes now release, This diluted to income of we the today. income the our press taxes, conference our earnings found in reconciliation and www.airleasecorp.com. before over on Unauthorized XX-Q to net CEO and of adjusted as description issued investors Plueger. measures non-GAAP our

John Plueger

for your of report versus million of quarter of us million for all thank to Liz. today. XXXX, $XXX to Mary Thanks, you an in I'm revenues $XXX the Air afternoon XXXX, pleased that total recorded Good increase joining Lease of third X.X%.

XX.X% respectively. profit solid This Our for per the quarter, resulted in to year-over-year. X.X% third before $X.XX quarter continues ALC quarter this consistent 'XX, return on a pretax share diluted $XXX year-over-year and and third of income deliver pretax increased million of equity, taxes increase from to million the EPS XX.X%, $XXX which, margins was X.X% of in XXXX. as of

$XX.X with were quarter billion, a at up XXX through aircraft quarter value $XX end from ALC's fleet September. deliveries the with aircrafts, included at of year-end delivery in XXXX. three third from expected, owner As light, net billion July book

During the the management XX sold to aircrafts another X services a a well. including aircraft, aircraft total aircraft quarter, Thunderbolt. to to business sold and seat of to X aircraft profitably sales now a lessor, sold of X is as complete aircrafts X ALC total Blackbird sold we performing II and our

as Air that Monarch, our Just reminder, bankruptcies pretty sell our our to Air that a to an Despite Thunderbolt help us aircraft aircraft have Blackbird aircraft seen recent airline our space. demand, the is designed on carriers. customer single as does Capital Overall, were and Monarch but using a midlife while product across allows in in demand. us lease remains continue uptick points opportunistic the and to Berlin marketplace business touch expand more in strategically footprint capital, strong in the lessors those including or single and the such we've Berlin been X new used, total in both aircraft paced,

believe ALC's aircraft release the would As X We of rates, were at stress to the X attributable is second in main such, uptick some the on-demand think. normal rates; as factors. market not

strong continued other growth traffic global September X.X% above load through growth factors recently the First, reporting with with XX%. passenger year-to-date our of

delivery Airbus cover generation by their impacted adding XXX-neos current needs by delays and of to extending the aircraft. AXXX leased aircraft current airlines Second, those are and causing

to the our The in We like and the as the XXX-X, as new as and twins, own them, for by carriers being long-haul done large away attributable widebodies, remains I is AXXX-XXX. larger - LCC from long-haul by hubs. to the newer and As travel primarily seen major long-haul point-to-point continued butter demand well bread this consistent by call specifically being and is growth for believe point-to-point carriers. growth AXXX-XXX healthy medium the

by widebodies size these a their largest cost. handicapped point-to-point the routes, bit and are Now for

XX% placement and aircraft is XXXX XXXX. beyond. XX% has XXXX aircraft widebody stand at placements through in focused driven overall, So through for and for now placements aircraft and percentages Demand team ALC the our narrow and in on these

from and secondary all to ahead lease. pipeline deliver contracted to subject quarter, fourth market, new X Looking the the our from to aircraft order we've and X

sales level aircraft Additionally, we X and with quarter. we of aircraft this year achieved anticipate the only sold in are very fourth comfortable being we've the

about. ask me as areas Let sure more to now switch I'm X us you'll

delays. delivery Airbus the First,

head of XX we we X to few into Pratt-Whitney powered with a deliver XXXX, resolved now we But AXXXneos challenge do next & quarterly move turbofan and issues XXXX. want the to have now Whitney [ph] scheduled production into AXXX, you for on the CapEx will XXXneos units the to further might that I that weighted makeshift Pratt have Trans back for right now At XXXX. do be currently more CapEx These say half side. to year. quarter's updated expectations that and second say, a in XXXX, we appears for to geared suffice towards provide XXXX. powered however, optimism end the more catchup and are we being As call, anticipate

we revenue as already for growth. this used marketplace have year, aircraft in the incremental So looking lease done we forward, remain optimistic

won't. ask premature this us which left changing. with say to point, we we're you'll the Let down, me touch I point, still recently think I rulebook and was is about, most reform towards at Air that, speculate, tax just Second yards keeps to it's XX the introduced the how line and Therefore, feel go at impact legislation Lease? XX-yard

positive reform will the a seen line make his what appear for Greg remarks what net bottom us. we've that comments is today, does this and with to a we've However, on be few tax - in more seen

the is to Bombardier know The third acquisition of point want I proposed know you regarding C-Series. XX.X% Airbus

and its Commerce uncertainty publicly Airbus base. cost lower have to their is a we the given The aircraft ultimately, Boeing, Boeing at As it program XXX of responses to the now removes unclear, U.S. if, market the huge a actions We know looks stated, has and broaden Embraer and C-Series Bombardier unknown from successful, and level to the that active. had The past. if any. in by is path Department conclusion and the potential further both in Airbus XXX to opportunistic and and begin landscape support. space of days transaction. monitor the are future others, transaction progress credit not with market the from evaluate ALC's fundamentals, product used decisions But MRJ and adept Airbus this at Embraer, customer current seen. aircraft pricing ALC evaluate be as smaller not to to aircraft OEM governed the by all space, seat would continue or and Boeing global whether aircraft, demand, Airbus this will C-Series remains - base, so to is the or causes to bit with,

all Look, industry So this? as away the and from here been of well. be. dynamic and evolving what's it ALC is will the take is always has performing

You the once that financial of with our see results. consistency again,

Chairman, over turn on with over call that, further Executive Hazy, provide me the and color now ALC who our to you. remarks Steve, the will Steven industry. let to So

Steven Hazy

third continues financial quarter our to validate. thank you to all and very performance you once as operating the you today. and indicate thank call again for outstanding deliver ALC and John, much, results joining of

our payable existing management share leases, has to portfolio in January Air quarter, XXXX. annual stock pleased our our enabled to With Directors long-term shareholders, since per team, in line with in $X.XX award very report Board results. cash share, increase together ALC XX% high-quality types our priority been in-demand has I'm per per authorized most $X.XX superior beginning of Our a from to that our per dividend skilled the year Lease's of inception ALC's of in aircraft common generate with $X.XX achievements. financial has mind, to this on

our in are business confident very We forward. going

on has advantages. make the regarding space and of inflows want take clear, long-term has, want to and to been our forecasted capital. future ALC it in order primarily investors returns into will continues needed emphasize Lease competitive does lead the reports are desirable, funded longer-term the hundreds recognize capital to of Air good course, the marketplace highly on discussion is with the assets do Looking that not provide competitive rational Added and cash flows. by industry. price-driven. news and the market, much impact its part industry in Competition industry. which lease which demonstrate of Instead, at I sale of of remain There our growth aircraft the horizon, is because consistent in speculation competitors capital book be strong that to key dollars main back our and of billions I increased

As rental many of has visibility through XXXX revenues years today, come. projected us lease of excellent ALC to for our XX% long-term almost contracts, providing under

South America, remain additional indicated, slowing be low-cost particularly, a Air Eastern the even down also from in the seeing carriers. health opportunities particular to an soon. inability new seen while moment, industry. continues not ultra- Asia and Monarch compete resurgence and North are is contain I also airline John see in we Europe, Russia. we, to and about airline's We're in seem Regionally, and in in demand growth at the throughout at interest anytime Berlin. As and sourcing does America of Lease, Alitalia, But of optimistic Air effort costs Europe given the efficiencies and successfully stemmed trouble with our more to know and low-cost Europe events Europe within develop

the pressure evolving United offerings States driven These not long-haul feeling certain with Some or by as are and low-cost airlines region. well as the situations also in country to constantly currently limited are are available. industry

fundamentals focus asset airline mobility. We stick ALC modern, we profitably and reason, in-demand customer geography types exposures. where operate the can strategy, very on strategy. this diversify to airlines our For by most only the keys which have monitor exposure We and to aircraft we

downturn. as earlier can for list act to customers bankruptcy, like in help Airlines Pegasus aircraft helping opportunities target a that. these is average it's book this shift acquired the concentration deposits with cushion finally, maintenance strategy, package value. ALC and our our consolidation year, events veterans whether providing As a neo importantly, X% is and often Whether cash quickly any the create helping and did that a fleet in reserves its ALC, than substitute security transform lessee our fleet, as security or interim profiting our in lessors with is is we robust and Airbus headlines in Turkey of mobile or today, less we're and airlines, customers lost net cash in value that manner. occurring of a What act additional or And industry it's and we from

provide will landscape. performance predictable ultimately, global ALC's which the in the competitively broader So in strong There market changes industry airline be generate and will, tell to to shareholders. support with believe customers And and more airline landscape, when on to our ever-changing be ALC's to the the in will the carriers an Lease and for activities being will Air conclusion, airline time adjust turn call I to can and quarter. that, value occurs, is healthy. it we our update long-term Greg over there financing

Gregory Willis

you, Thank Steve.

great share quarter, of earnings another earlier, recorded $X.XX. generating we per As mentioned diluted

average portfolio and weighted-average lease growth by constant all risk driven factors, And assets are were as basis. remaining, term on we're results well supported lease and our Our interest which age, expenses. SG&A further as by lower a

providing As future. visibility aircraft we revenues we third have total look $XXX from billion us committed activities. In including and $XX with significant million over of of quarter, the rental revenues rentals, and million forward, million, minimum trading we generated other sales, of the into $XXX $XX

Our representing the $XXX million of purchase fees. sale $XXX the fleet from in in and million million X proceeds million. were activity generating other a $X aircraft sale new aircraft and Included trading and sales, of activities, from gains of aircraft X included in aircraft, of net CapEx $X management

want X in quarter, As to the expenses I it relates highlight items.

expenses. the transactional second year $XX the largely million First, $X.X point lower to to as million due was and SG&A its fewer compared quarter, reached at lowest in

revenue our to growth, leading expect increased operating our outpace SG&A will to continue efficiencies. that We growth

reduction we cost composite from funds. our of Second, continue benefit a in to

this expense resulting interest the from lower declined to prior having quarter composite debt year, compared our this funds. - higher Our a resulted as cost despite of balance,

aircraft drove reform. equity [indiscernible] on return containing The law. our deductions. implemented month interest on allowing current such XX lowering of a will, rate, other together these adjusted among basis. to depreciation expense savings, to multitude expense achieve XX.X% Our It's be into changes if tax Transitioning an us provisions, proposals the ultimately, changes, and unclear changing pretax tax results, activity, communications items, trailing rules, life-size on exchange including with modifying

as of a our appear they based taken However, assessment current the be ALC. proposal, to whole internal to beneficial on

We will specific monitor on the aspects but be matter, to tax this will not the of on individual code. continue to development commenting changes

representing in the capital the back Looking of weighted $XXX ahead aircraft, XX is anticipate to fourth which million heavily towards quarter. quarter, expenditures, approximately we end delivering the

we XXXX. approximately further the noted, on X We anticipate million quarter, in fourth update early activity representing $XX John in you quarter fleet aircraft our only As selling proceeds. fourth in

committed unsecured end to quarter, liquidity, of in that, report remain $X.X substantial providing the our strategies This company, Mary XX% of financing flexibility. X.X:X. we and to now financing to at the pleased debt-to-equity financial target our includes XX% we're it I'll review billion debt, fixed-rate Finally, of the us activities Liz. of of and results and with had the my turn ratio We third back

Mary Liz DePalma

open hand the Instructions] over operator Q&A. Thanks, Now, I like would management the the Greg. to concludes [Operator This the remarks. call to to line for

Operator

Thank Moshe Orenbuch first comes of Suisse. Instructions] Credit line you. from Our [Operator of the

line now Your open. is

Moshe Orenbuch

Great.

your Could about So thanks you; there for just some all as maybe to XXXX? you the detail. deliveries thoughts existing have given of the order right you of talk bit as market, a likelihood the the ongoing, in current being supplement in the to from transactions shifting kind of would ability said, your little book

John Plueger

we Look, sure, Yes. - Moshe.

CapEx, even XXXX. for pretty these significant have We with delays

good Next quarter to as is also pretty going be well.

for So I $X or about so billion roughly, circa, think XXXX.

to on this Having be said with that, year, total, it's going like do is said We again, purchases, that earlier end on change to So are the lookout of Pegasus used geared the back buy this we much. look time. don't more just we we the we're half that the going think, opportunistic think, year. the first the to aircraft weighted. for XXX-XXXs, right towards always the airplanes right And at for

playbook, because you. and develop, of our our and remains strategy the as So happen delays, those we advise will But when same. certainly and these

Steven Hazy

because our one deliveries, with earlier more backend weighting power Conversely working doing everything of to item. we of an and deliveries some in our as just are with XXXX want income more year Airbus accelerate begin lease into the I early to as Boeing to much associated accelerate aircraft. into success we're in of in XXXX work generating first possible continue push add to to in the happening very what's Boeing to having Airbus, some aircraft closely do can to to we we as we're and those deliveries. And as already Boeing half with the month with

Moshe Orenbuch

Thanks. probably you've maturities And of see in just got I follow-up, $X.X billion debt Got a Greg, it. 'XX. as

replace like bit as to what talk Just there going it's you and little about look this? a cost the

Gregory Willis

the 'XX. layer funds, our going of refinancing change most current cost debt new think that as unrated to in initial in I of 'XX We our see don't composite that's is we to in we're of and material debt as a some current look benefit come our levels. pricing savings our cost levels, at we rating

Moshe Orenbuch

so Thanks much.

Operator

Thank you.

Our next JPMorgan. question line the of comes of Jamie Baker from

open. Your line now is

Nish Mani

to so a consider leasing would for I entire platform an you guys. very is on portfolio you guys question rather, need large you in platform whether are and either how your afternoon, you you new even to to on Mani you buying comment speculation, the I that or This support want guys are Good a sale? the given Hey. guys looking think about scale do guys? part answer Jamie. or to guys term, balances and aircraft potential about not that I but can't M&A in potential Nish bolstering of there platform know bolster near specifically, don't sale ask you of build And something of a platform?

John Plueger

Yes. Thanks very much.

do we scale. that So have

If billion. sheet book, our billion order roughly, circa against forward our it's balance just you $XX today $XX at

So years, provides organic the the happy next own that going level X we're with, over our forward. growth X or

at So very but we forward, conscious otherwise, it always having said the conditions, And fleet have look are purchase always terms, is pricing. or any of that, and always, really moving very or M&A side other on as any opportunities will we opportunistic. opportunities

it made forward. not small, to Whether look going large so always taken sense platforms, forward, do or have continue we that and know where we'll thought is not or So any our become just available playbook a we changing.

Nish Mani

pushed potentially year. you is mentioned, obviously, guys that back being OEM deliveries there next Is I with Okay. mean -

pieces, the words, of, in term or portfolio you the that near was to either help can be year you bolster some perhaps, while fill with early value into Would interesting, the sale the of up XXXX. want platform a the realizing up would partial broken component? tailwind? something term the larger in other that in you You'd that this near so if sale on In gap

John Plueger

which there is, thing the of actually totally talking is independent answer about delays. short-term you're timing, a on what the The is

on like strictly our timing about of and decision when whether Our be shareholders, in focused that. talking the is irrelevant will you're interest things

Gregory Willis

deliveries use for delays clear you absolutely Boeing be this from as a the from we OEMs, I mentioned few to Boeing accelerate delays to we're the into And are just our are some deliveries with experiencing juncture just Airbus. contracts. we're there in have no the on-time. working minutes Boeing, only than earlier months record, when ago, our And are And word what

John Plueger

That's way. right. in any Boeing [indiscernible]

it. That's Okay. so it. you guys. much appreciate the Very for color. I Thank helpful,

Gregory Willis

welcome. You're

Operator

Thank you.

question from next Linenberg Our the Bank. line comes Deutsche Michael of of

now Your line open. is

Catherine O'Brien

in afternoon, for is Good actually gentlemen. Mike. filling O'Brien This Catherine

today, with actually, coming sell of right that quarters strong peers the that amount So to at in And this? since extremely his aircraft agree your now, one earlier has he was market Would used the said. of influenced strong looking you noted aircraft the XX-year, all?

John Plueger

Well, I used. in both that new overall think demand, aisle an and we've seen said uptick we've single

We I pretty also aircraft current Also, the them all. XXX-XXXs, AXXXs more place and the current XX, strong, yes, is aircraft could very place generation, today. very of So marketplace I could them strong. them strong. - single very, think the have all, we XX generation, should very,

aircraft is sell. know and know, balance the So to us. we've And that. But balance we we tends think it always, the to driven. for right life don't I - very I ever We That strong. is buy a I specific when is don't time it is when right seen, as be is the strongest

et big But of the drives CapEx is picture most mindful picture, growth of us, are We the in that thing of all, value. aircraft our cetera. our

Pegasus bit market last So difficult strong we that to as But for opportunities. well-priced might more found make fairly would airplanes a well. say year the us these little when I was

regard. makes of kind pretty find in say maybe just looking But this the a us that it for resourceful for. it would we're little I So value harder to we're

But absolutely do listen, lot have we to experience think a source leave I here think it continue sense, we we we and us, things make is look. will market so. do can to the very So if that strong. of we

Steven Hazy

than the sell third quarter, in And we more delivery took did we aircraft of.

Catherine O'Brien

ask of acceptable color guys you to aircraft and you. could be you Thank would then, one third-party? Blackbird And And or Thunderbolt process any are sell are the to follow-up. funds one whether on into there versus parameters Understood. price really aircraft if any shareholders, go profile, Can risk or helpful? describe through on Blackbird the the purchase Thunderbolt deciding that

John Plueger

I as to stated have think, you vehicles. Well, at those look difference we've in before, those two

opportunistic earlier, address inward to source and Blackboard is commented concentration where look be looking capital or for our for primarily reaching airlines and have really is I go a capital that not fleet. very we to more from that. needs from opportunistic As We exposure further might useful growth at that's out and as - on limit

so much Blackbird. fleet, it's from So not coming our for

to be For as were these sold in tend We you in however, Thunderbolt are already. a little these the lot more mid-life bit a space. Thunderbird, of which - aircraft the know,

the them point our midlife our So extends leases. into this therefore have it in section much is reach at customer sell what less part those with all keeps contact left and great the But we time. to it about of point

So really, that's important. really

simple is into the sell it. that there. Blackbird to I opportunities, are keep and happy that's young simple as to just our great on tends can Thunderbolt and would We programmatic quite platform, is think as say, the our to for allows strategy, aircraft model, is, us way be and focused primary our more this I business on aircraft a and platform, answer age as I So which management answer keeping investors

Catherine O'Brien

Thank much. great. so you Okay,

Operator

you. Thank

question Barclays. from of line of the Mark next comes DeVries Our

Your line is now open.

Mark DeVries

Yeah, thanks.

growth some. forward that all capital books, when decision more strong order it mean, we seems is and around like the increasing of consume the guess I the potential look in a could a at that explore recognition be little to I wanted Just your you'll then dividend. flows. and cash But embedded generating, the performance there growing

just So and I of potential of to distributing was you manage sales more plus than kind accelerated does capital? of any it that it implications Thunderbolt And fleet. the of help rather terms in the minuses and also, through could this in me hoping have investing retaining way think in is the your earnings,

John Plueger

and between connection aircraft used the sales the are dividend No, non-existent.

First we let of in as all, had a in We the several modest XXXX. platform me public first this started emphasize, very years. dividends company out

year our dividend airplanes. dividends. our the dividend share, current in a of $X.XX buying as more much that we increase represents significantly increase capital a know into our book in a little with which above per shareholders only going $XX today than buying that stock, fact, at increase trading shares per $XX represents profitably deploy value, back felt XXXX, to way appropriate Our can over was this as as the is about million the in we company, million cost We dividends. And we aggregate our more of an that and performance rewarding share, company of are felt $X.XX when,

Steven Hazy

fleet would add, is and balance, grows we and more will aircraft our bigger, a sell. just I gets as life to have

So strategy. that's normal part our business of

part that's you're side. But math bigger, So business sure, a of part of I'm more. it's side our looking But fleet, normal gets model. a would of as we dictate it also our that at more math be would I the selling not the think normal

quite think, I nicely in, ties all hand-in-hand. it So

John Plueger

fund selling to not aircraft we're a used dividend. But

Steven Hazy

Right.

John Plueger

that clear. I to want just make

Mark DeVries

capital. we I be amount about was at consume over book the of thinking if was I deliveries, growing it we No, a it potential that of think how more fair like big could the looks when couple could look next implying. years what that's your

so continue And much point add to was, managed so, not fleet you some to quite as my consume can but your you sell do that capital?

John Plueger

We own going growing the our fleet at our managed time. embedded same fleet are we're and

Gregory Willis

Greg. It's

debt shows raising plan we're maintain debt-to-equity X.X and X.X:X to dividend. ratio maintain our without points internal our out, as orders and of take - Steve delivery able equity, that also a Our

Mark DeVries

Thanks. enough. Fair Okay.

Operator

you. Thank

of comes of question Helane the Becker Cowen. next line Our from

Your line open. is now

Helane Becker

had, asked in Hi, a Thanks, time. composition had and questions But Thank fleet. [ph] you of just about Most operator. for guys been the I question I Marilyn in the answered. the actually the

have such it have fewer where or for not you X are candidates does XXX some only those type really big these matter out... you would fleets With have one of XXX. ones agnostic you and of like or one of prefer more You to sale, aircraft of of aircraft, bigger X or aircraft

John Plueger

a It does Brazil odd I reason for we reader Embraer Azul But with is when see the we can look that to On not answer, unclear close David good aircraft it keep, and the Thunderbolt XXX. and a question. have of extension relationship Airways they African the we tactical that and Neeleman that very have X have that Embraer to that the aircraft sold process And X our for But at our Nordic aircraft in South were would as in of X a to Brazil. because you recall, We during period. downturn that Brazil. AXXXs, we in sell whole back to or fleet Azul anyone relationship to lease long decision our X we portfolio had hold extension be. already we disposed made process, how at Aviation in that at decided least, Capital. is a Gol during lease lease, consciously, negotiation in we did with own was aircraft continue and else Tam reason to the extending we

And that it's correct. aircraft. new comment totally we So about not retained XXXs our

ER KLM and also the X lease. fleet ERs, have that large but process of in extending we're XXX-XXX we of have XXX-XXX We at

Helane Becker

Got you.

Okay.

I Sorry, those XXXs. missed

Steven Hazy

missed. you Yes,

Helane Becker

I XX, did, the missed guess one XXXs, I I I XXX. just the saw

Steven Hazy

in billion well over represent value. XXXs XX The $X

its our other accomplish are activities for weather those So a sale extensions, these into objectives with sold. become once that we eligible then portfolio or aircraft aircraft combining

Gregory Willis

is This a that's a of one good. have this good only that, problem. one of pretty and actually We

John Plueger

AXXX. [ph] only XXX excellent X the years. last accomplished and We're very actually ahead are yard Those of over looking X we recognition not that are happy we've problems. Those one have X and that UMXX the fleet planning

Helane Becker

just on then And you. I have. XXX, question as Got other the

and I Steve, the talk of I know line about aircraft? don't you to this the know that reopening part, know time, I to passenger have more production idea talked I you that So accommodate - well Boeing but to all

John Plueger

FedEx line passenger where (XXX) open. ERs. I discussed production that's Boeing doesn't which to of been horse. billing is UPS down. create for whether line This a open. fully a at It's have the as a is is a is same economics line to think for people alternatives. It never is case They're number call, various airlines. shut with another it's XXX, XXXX-XX. aircraft freighter media at talking discussion And on You others. I The the XXX news. And a and is Boeing being think This about area bridge the work code about. The XXX like production has know Fake what is line marketplace in looking or the XXX-XXX looking the XXXs. And and

Helane Becker

Got you.

answering very questions. for Okay. thanks much the Well,

John Plueger

Thank you.

Gregory Willis

welcome. You're

Operator

Thank you.

next Valentin comes question from Our of Point. Scott Compass

line Your now is open.

Scott Valentin

my for Thanks afternoon, Good question. everyone. taking

sale wanted of supplementing, guys back possibility with may know to delivery. back. you about Just compare be maybe a I lease the sale new versus talked lease

one should how think versus other? the the of wondering I about Just profitability

John Plueger

shut leasebacks. the don't you of some where looking quite impression sale the I Scott, know know, got we to I don't were

sales them. comments, do earlier aircraft don't this All XX Steve's is like Pegasus In used from buying say we said we, in XXX-XXXs looking fact, just did opportunistic we're Turkey. for specifically, year, in we really transactions, we

we're the plans aircraft commented avenues deliveries Steve couple some transactions. some looking as forward to Boeing leaseback don't two a sale have any of months. and at invest are used in accelerating on, then incremental by that we So Only

Scott Valentin

returns new Okay. for moving acquire similar? how you guess, versus And know then just I to you in used very are aircraft. the that aircraft. I selective guys Thanks clarification. pretty Are aircraft

if similar? wondering are, somewhat, returns Just the

John Plueger

generally returns are known as the age, aircraft the Well, I have exposure. little taking that lease higher lease I an speaking, think, you're residual on initial factor. mean, it's value and rate a you aircraft bit But older do

statements of think financial generally have our used is as that consistent just and the we balance to drives with and our returns aircraft our do look and at that new primarily best So picking, result. overall I the aircraft

that ultimately, then look the to deals price at. good you acquisition pretty more key factor bigger price as aircraft, a because around, as that We're and we looking So move focused if are and as go think suffice simple. get get good used really to to that's I probably on side, say that you really the really the aircraft aircraft sell we element, on you it's

Scott Valentin

One final question.

a bankruptcies in as at on big your Just the is undergoing We're higher of cost at Steve of a carriers in the change wave dovetailing all mentioned, of list carriers, has Europe. changed some on as Europe I the putting in of a some result and that's picture, guess, watch front legacy Europe? model, low-cost end dynamics in carrier that, pressure

John Plueger

no. No,

in and Our watch is It's we're say list that's small on remains there very covered this cost remarkably low and higher is. pressure secure well think to very are by anything wouldn't low-cost revolutionary I a process, that's on ULCC pretty to the The very, airlines place reserves. worldwide cash average others all. and a at just it is a airlines component, and just globally adapt wave deposits stable. - able normal and I not. some way are and continue

retaining that legacy service program distinguishing are of thing. product, sort large by carriers their level a economy, they're the of frequent differentiating premium higher a flyer of and business-class, some And and

wave this I a an acceleration, the I means. deceleration, so crest any over, don't environment. just see think we're We rather So on by any of adaptation don't process is a it's normal - evolutionary

Scott Valentin

very All you right. Thank for the much color.

John Plueger

Certainly.

Operator

America. our from of next question the line Bank [ph] Christine Thank you. And Lewark of comes of

now open. is line Your

Unidentified Analyst

view a Steve do Hey. new you of Do Air aircraft? be, ownership aside you aircraft and on this how to John, And how have would C-Series? and from a Good significant you take that you that to could substructure what would discount, see afternoon. of Lease pricing the think order C-Series changed, partnership niche mainstream the to market the Bombardier think from follow C-Series? the a in to

John Plueger

it's between Well, engagement, still first of an Bombardier. a not and marriage all, Airbus

to Europe, anchor enlarge then where And once base to to we'll aircraft Airbus' till So committed number C-Series, They a beyond and or America, the goes very, the the our of They airplane meet of But offer see we have go. that up need are the participation. elsewhere. think, settled, criteria. very they now, airlines. attempts competitive need have that and regulatory I of in do to customers airlines not Asia and issues the need and at to North the customer the any rebuttals of price success key transaction is sort de-row low

a that as if airplane. particularly, However, expands terminated the sort and program, production quickly, becomes if the is AXXX-neo of in partner very Airbus all from that could the being change

Steven Hazy

both XX-neo sort the cost Boeing does what XXX And would as from think, to side. Boeing smallest mean, sales look, widely lower to whether harder or the on the Yes, is generate units, airplane. a of hard-pressed I profits Airbus and be allow its I to that smaller Airbus, really or it's emphasize cost it's perhaps, are known AXXX mean, Airbus X-max, out. I this

accordingly. and And share, as price that price in also Steve its as for to just premature market will et cetera. they going transaction the drive, we share. going complete don't the better a react the AXXX, we extent know this can probably act until remarks, So indicated really and forecast better But customers. it's our it's - concludes, Airbus to bit we how my I that just stated and said market And Airbus and now, and cetera, still are right needs et demand to it's and to - has

XXX that a indicated in is know. There's to So is also segment. huge also my certain seat segment. But XXX remarks what the, of hard lot a segment is not it's to in OEMs that

It's has and any reacts be or for seen. us Whether in So made part. on comment. Airbus lay remains manner Boeing is a not to to the just stake claim to trying that premature

has a family that, EXXX, base The XXXs. Embraer other XXX, very for is large XXX, customer their point of Christine,

have I plane their XXX that right operate think around customers they types.

So that's today. also a as headwind we know the for C-Series,

Unidentified Analyst

That's very helpful.

So gears. maybe switching

AXXX-neo burn aircraft feedback? that the customer performing and provide with have in update you fuel to on us regards is For portfolio, the can the an also how you aircraft your X

John Plueger

burn is very gets aircraft X is hours. far, feedback better from excellent. The it and is the quieter, above positive. are And airlines. and And and range AXXX-neos the good the both we've within is The fuel experience, customer performance It's The better. cabin. AXXX-neos, better really on the so externally longer good. customer airport sectors, of performance our the The had aircraft

Unidentified Analyst

of last And we've as a if or percent shift question. Great. your have do of of seen year, value. the this does active this last of could your to your Since with exposure the China squeeze maybe book I end to exposure Is including strategic an deliveries? timing net takedown Asia,

John Plueger

there's - strategic the shift. no of It's no deliveries. There's more real timing of

cetera. next we You China transaction ago last for and large in et and know, aircraft now did some bit scale year delivering year, several years a

So in this our evolutionary is of more of past. an think growth reside majority We Asia. still will a

more and is go will Asia. further, a this see further And as we much us for I'm announcements into aspect. a So you later delivery and transactional 'XX, you'll timing sure, in on, see

So that's all is. that

Steven Hazy

different I starting going in XXXX, XXXs in mean, for we XX have Asian 'XX, 'XX. example, starting to X XXXX, airlines,

are Asia. going a that AXXXs have began of number to We that month this large delivering

airplanes both same to we of Asia be will and have and Europe widebody aircraft But the lot time, going elsewhere. and at going of a to significant a deliveries, there So number single-haul China.

Unidentified Analyst

Thank you much. very

Steven Hazy

welcome. You're

Operator

hand Mary today. to all that's And back Liz had you. we DePalma the any remarks. I'd like to questions Thank call closing the for for

Mary Liz DePalma

This disconnect for you today call we you year. the next today. participation forward again can to the all Operator, you please if Thank for your with and look line? concludes speaking

Operator

gentlemen, you. Yes, program. conclude Ladies the thank you. does and this Thank

may great all You day. have a Everyone, disconnect.

Air Lease (AL) 9 Nov 172017 Q3 Earnings call transcript