AL - Earnings call transcript Q3 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Air Lease Corporation Third Quarter of 2018 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] And as a reminder, this call is being recorded. I would now like to turn the introduce your host for today’s conference Mary Liz DePalma, Head of Investor Relations. ahead. go Please

Mary Liz DePalma

and our mode. Chief our Earlier welcome Willis, the At and Liz Officer. time, is today’s this our Lease our website of earnings Steve today, available the participants and Corporation’s be and Hello our quarter to on release webcast of call of published we available our of conference President earnings for Plueger, and Hazy, by section afternoon call, on third be the website. recorded President; joined replay of at Chief instructions for XXXX. is third for copy Vice this quarter and the the Greg our Thursday, Mary session. Chairman; At XXXX. the Officer will and Executive call conference Q&A Financial XXXX today, conclusion in all John listen-only will given Investors I’m everyone this November Executive Air X, Executive results This for to www.airleasecorp.com. DePalma, This A call are webcast being is

company’s in expenses questions operations we meaning represent forward-looking without Before results. or Corporation our statements note performance future statements and your and events. information Air and expense a that These description cause item. certain compensation no expectations. with future affect Commission Securities this update to forward-looking risk to future income factors statements future refer call, for and assumes or risks of differ estimates other Act. statements from please to limitation, our statements and August the including Exchange today, regarding of Lease projections performance, revenues, stock-based any actual Securities operating X, Please to management’s answers and expenses, results within only that speak new conference light obligation the These XXXX. of and our materially involve any Litigation estimates uncertainties as to could results Private may of certain more for filings includes, the in the that Reform detailed begin, as are information This

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

John Plueger

per to share. an $X.XX $XXX Liz. than assets record as $XX.X good more XX.X% over thank the had reporting Mary and of nine We for to you revenues to of achieved that months. increasing joining all over thanks, Well, million ALC EPS diluted quarter us. past happy I’m excellent afternoon And grew billion, report you quarterly with our

net included billion consistent. billion $XX.X from $XX.X with XX% portfolio rose and over Our at a strong pretax fleet remain aircraft third year book end ALCs XXX income last XXXX. of owned value our and end year’s metrics quarter, at quarter up

aircraft slipped aircraft delivered light quarter relatively deliver the that with July into October. the As September. in one has expected were third fourth deliveries and seven quarter Only through to from quarter aircraft in we delivering in already expected the early third

XX bringing of profitably sold we our our the will We aircraft. to end most platform, now aircraft anticipate aircraft year. total between Thunderbolt remaining II count II be Thunderbolt to eight XX quarter, of the the and of fleet sold a the total During managed

it’s margins two placements. aircraft and Strategically, It’s our one of timing. the However, and ratings several remain Demand our and why that on three that or OEM increasingly may leases, forward highly have managed and it’s but grade other been of reasons, now order, orders, inception consistent. for the on sure accident the and leasing metrics let total, In solid for development as main examples. slowdown strong, an competitive for XXX and by structuring such owned, the focused has new we aspects probable options. environment as environment see aircraft lease the not and reprice hyper execute commenting for paid XXXX. since remind have our business is management our with to our off. investment years. were possible including no and Competition of ALC’s in the remains as for operating many simply business, competitive used executed on others now we we rate Many have early ALC market we everyone way slip of aircraft, we remain very getting mind, in planned and ALC. planned this other and stable This our me our Yet of example, been into of

pie airline you base the world’s that so grown global for the larger Let me the fleet significantly, everyone. remind in is also has aircraft

eight XXXX. XX% beginning ALC than mid-XXXX stand payments our as and future to forward as Our order for rental Denmark the for book insolvency aircraft placements minimum percentage quarter, delivery primarily lower Primera well on in into place slightly total currently XXXX. due of is last for lease where This had at in

for satisfy demand us opportunity gives current good positions each requirements. these this actually a strong strategic of to have and We customer

this immediate these aircraft So as in focused term. strategic near will Accordingly, the such we’re on anticipate more we all be placement. versus placed aspect

has at been brings downs doing team new here. me management point. of for Dealing with the ups decades. something Now another important is Nothing industry the this this airline to and all

asset and emerging markets, the customers, currency seen on our on and have higher airline pressure remains the and fuel Lease rates selection, while of interest fluctuations, lessee purchased due appropriate in health liquid the we types. We place global most profits in Primera. risk packages as manage aircraft and costs, having labor modern was Air demand to security we the the fuel always, case As focused diversification, with through efficient

generation airlines Taking those is airlines leasing view, For continues globally XXXX. driven and market ALC most high or replacement to expectation a delays the are profit aircraft delays hedge passenger the global prices for our fuel best days current and additional focus possibly youngest we leased aircraft rising through aircraft on our a more which generation historically and level purpose. see this we demand by XXXX aircraft extend impacted needs pressure for airline – customers, Also, fuel to to are the and and OEMs, be rising will newest efficient current today. costs aircraft. this driven delivery see the against continuing ongoing strong be aircraft ongoing renewed traffic that the in add are causing These into they at growth, has and

expect full forward this would we’ve into our you account in As taken planning.

political headlines. onto continued and global Moving trade

fed and specifically are date, being on we trade watching of global on and on other global increases airfares ALC. demand concerns extremely class term The middle global not see We factors. a with having traffic, outweighs in for short cheap do closely. in by airfares see passenger no potential to traffic. an strong respect to global effect is on tide the a very events are indication global definitive or material impact indices We To consumer more the aircraft medium rising dampening

Looking ahead, as end we proceed you confident between XXXX into XXXX. XXXX and the and the remainder remain of into now of

aircraft delivery. XXX have We new

has rate as adjusters will vast they deliveries XXXX continue and in XXXX leases As a been at they going were quarter majority we of and and at had deliver the our book. order our intended throughout forward reminder, into this just new signing interest and ALC applied as our this aircraft included

and prepared this growth excited fleet. well our for are of We

equity same liquidity needs opportunistic and accessing approach the you approach markets X.X:X target successful an his maintaining remarks. of time maturities and conservative to the at Greg debt our will managing While our in our remind and debt and capital ratio. to

to More much Air management to of a and group, outstanding We stock percentage any a our fleet which color teams traded best environment the provide our And an existing other in than of industry and Remember, current Steve? future hand commentary. lessor shareholders to the industry here, by over conclude continues management ALC as publicly the Lease business. than in ever, managing common a as I’ll and a that, call with is huge do Corporation team. management to own operates. speak the margin. confident aircraft greater our Steve I’m as to further the So excellent our job and team we as team that you a have

Steve Hazy

you very Thank much, John.

to customer performance. per Board to Directors quarter. common financial we dividend, to per quarterly the have first excellent that with This strong ALC dividend, year, outstanding you from while fleet, cash globally this time increase financial has performance our sixth As the of and and base. our share we declared in ALC continues consecutive February diversified dividends our declared of dividends just per long just leases best-in-class deliver our during our shareholders delivered XX% since dividend $X.XX XXth airline of operating Owing and heard, which increase a the a shareholders XXXX results results period mark building we’ll $X.XX over to and per term quarter share in

Ocean on they the see To example, offer which is national Seychelles aircraft, – improve capacity an advantage efficient of signed week airline will airline I’m competitive John and passenger airline of their their with sorry AXXX AXXX Faroe the for an we the operate In placements be ALC delivering national in with to aircraft, to AXXXneo As under is from we Republic their mid-October evident continue Islands. XXXX. maximize for for integral second will in the Indian globally, the Airways Air efficient real the part aircraft region saw AXXXneo. also customers fleet demand recent operations. ALC which Atlantic of fuel a and second this our that also airline to announcement a second the This new airline which Seychelles, early our increase their deliveries. just and Again, indicated, leasing last place experience. chose and AXXXneo to seat few can looking the the work from their you is for lease is Therefore, time Denmark, increasing

and it third of book family the AXXXneo fall five, the Zealand, aircraft to a now Zealand, addition deliveries XXX-X delivery which order ALC’s Air relates to first deliver to quarter, XXXX. to an announce Air of the in of we New AXXXneo New in the As the airline is to between from

also We MAX just the delivered SX Russia in Airlines. to XXX first

In addition, of South Air Air Nui, are Chile and deliveries they EVA these airline the case EVA in book. that important the we taken to body deliveries Boeing have order It’s Dreamliner, XXX-X addition, to in example, to package the AXXXneo and and wide XXX-X Taiwan first ALC’s for this ALC In for from during out operate were delivered Tahiti aircraft a for transacted quarter. Air, first and and XXX Air, new New the America. Zealand XXX-XX SKY with point aircraft own the of deal in six was

percentage continues wide our on demand new consistent and our AXXXs, track the and be placement for that body forward, XXXs, remains AXXXneos. profile Looking to

over-quoted lease deferrals will see next Lease as airline continues placements cancellations four set valuable asset to you Air a as continued even are huge years months, a number upcoming and the after you highly of heard deliveries for just diverse airlines. OEM of to to pace book order of be the customers the and remains a five to backlogs by Over certain

as Our of last market revenue, industry versus future. continues to kilometers we September growth advantage report provide wide to a XXXX the strong competitive for the valuable in and passenger IATA up end of a passenger us order to with positions traffic year. year-to-date look X.X%

more in even expectations released reported seeing look result at air over an where the they October, In passenger convincing. the XX compound next the numbers travel, X.X% you doubling growth longer-term will the IATA today. in If we’re growth levels its rate forecast, numbers XX annual of a year are from years, for expected which

retirement is really the to there’s support than aircraft need the replacement are next more to jets age the growth, years. addition, and XX,XXX huge this with their a reaching during needed that In important XX

as ago, replacement know, ALC’s which More XX these statistics. are primary revisiting we the members airline As than years replacement ALC customers. on focus now aircraft and market is you place team many of the XX retiring loyal to and with aircraft of our numbers important

immediate market to continue have customers. our global airline time real pulse from a We

weeks, America, Nothing over America requirements. viewpoints I of last levels have. makers. their highest role just several of going the with discussing future dozens replaces concerns, customers aircraft air interactions of in the these the of growth valuable fact, these airline and play aircraft business. We’ll the Latin will that Europe, we that Their personal In feel North forward, elsewhere their Such met industry our their and at Asia, their discussions strengths, are in CEOs and future enhance and we the strongly travel the and customers. decision

and support be Financial over we update a can five customers, turn looking over be years, in to well the timed for Our at our in the the immensely profitable travel financing built on next growth call with continue and long ALC’s our and that, an to fleet Greg are to expected business last a will when the our solid over Chief deliveries upcoming that quarter. industry overall to I aircraft activities provide And the buffer time provide air term. Officer, the

Greg Willis

Thank you, Steve.

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

Our assets to driven platform. in results by managed average were largely with the growth along our sales

activities. million trading portfolio Our and revenues remained lease average sales, quarter, of remaining age the other XX% year-over-year, aircraft and constant. metrics million all ALC of $XXX record yield including generated key in almost up of portfolio million an third $XXX $XX rentals of term

activity approximately As fleet given purchase two John in included occurred weeks the our million of quarter. the aircraft $XXX of half representing of the seven our CapEx CapEx new of noted, last

to Included from sales, these We of benefit trading will aircraft Thunderbolt next in aircraft gains our of receive quarter. XX sale the earnings other the platform. full from and million is aircraft $XX

There highlight. Turning two items are to like to expenses. I’d

rate fleet, to last interest level the growth Despite increased tracks the primarily expense of prevailing liquidity. stands increased of rates debt in level currently composite basis rate only at nine and which average to our months. our the has the First, very interest primarily XX is our rise a of year, our attributable our due XX% which balances, This us over fixed last increased debt, the debt maintaining portfolio. points over and rise high our of

our deliveries, our new interest adding rates. adjusters see kicking We lease also continue in rate to and to aircraft base

up the to period. as Second, anticipated, transactional expenses year-over-year due SG&A in was this largely taken quarter

transactional As as abnormally you’ll SG&A remember, at third the that quarter last of in year was low we expenses had time. no

tax corporate reform We from to rate. of continue through the tax benefit reduction

In our addition lower our an tax which effective from tax of $X reform XX.X%. resulting foreign the recognized – the expense for benefit for from rate to brought credits, utilization quarter rate to million tax and tax tax we XX.X% XXXX from to tax

with our we expenditures. number purchases. Looking does Consistent any quarters, prior forward order quarter not aircraft capital – from expect $XXX new to CapEx million include the book XXXX, incremental fourth deliver of approximately to $XXX million representing of XX this

have in mentioned, to them eight John we chance to to would and we the aircraft sold majority Thunderbolt majority the – remaining as be of a of fourth II sales, anticipate Regarding quarter. transfer

to of business. financing Moving side the the

continues ALC. financial We ALC at benefit XX% rate XX% are issued $X.X again maintain In rate continues as investment was financing flexibility. achieving our efficient amount efficient in senior fixed $X.X other the with markets to in XXth – maximum the and grade financing debt committed a down forward. our stable active which our ratio a in the end operate outlook, unsecured all third liquidity, fixed quarter us remain We ratings, September, debt cost debt capital the unsecured to X.XX:X substantial equity QX. further well. provides in from for three strategies to financing of business X.XX:X cost we at notes quarter. of billion September ALC of of to to flexibility from with going of one And

Before this file be will expect shelf in we year. to to the to shelf of this concludes back we I note filing would an like clear, which upcoming our amendment of registration bond conclude, financing issuances. updating prepare that our earlier To turn May be weeks, registration I’ll statement And in a upcoming I anticipated an to program, company. results activities future further to establishment my Mary only and statement it streamline will This of review MTN the now for the Liz. our filed

Mary Liz DePalma

open Q&A Thanks, the Greg. line session. This operator now concludes to the the I management’s like to ask for remarks.

Operator

question first Jamie Baker with JP is Morgan. [Operator Instructions] Our from

Your line is open.

Jamie Baker

Hey good afternoon everybody.

whether in interest success leases rate versa a it prepared debt Just was the the clear rate past. signed vice or seven his now that to majority fixed But commentary, the the don’t wasn’t saying I risen, John balances in about deal deliveries deliveries rate that follow-up when for in but being and all XX the matching maintained the what spoken are its know you’ve quarter rates remarks fixed upcoming, leases to last rate? were variable the have are of

John Plueger

No. John. Jamie, it’s

simple. of very lease specific or rate a reference Our fixed rate a part base rate negotiation to lease the the do rate, we have mechanism interest lease that interest we to When key is a our negotiation, an deals index. is that

at rate lease may has of to well rate. which of there as day But accordingly year index, and XX increase formula lease index indices was goes in increase, delivery adjust is formulaically is treasuries, a for there’s we a the fixed actually what been goes was what those the in that interest what day compare basis and and that a mathematical rate up, point and – the based it to whatever appropriate we we if swap, year of the deal interest index every so happening, financial Now that be the at whatever. that single forward of seven delivery struck day, rate differ it

So, the delivery but fixed rate remains that once of over fixed term leases. full that’s lease at the

Steve Hazy

At that higher level?

John Plueger

At the higher level.

Jamie Baker

level. the At higher

That more I I pace you be let’s lot growth X.X, can’t book out production replacement world RPK that global sense. say And throwing current the your a follow-up, and look there, global don’t needs RPK might like X% OEM of if year, of but just in a right. know think business? All what does do the dial slows, next this makes torrid just clarification. this maintained the to Okay. For appreciate I’m X%. rates, relative X.X? What for it’s

Steve Hazy

of place long lead is know, three you don’t We plane. to pretty Well times. to until delivery aircraft Jamie, before all, our first a bit months philosophy new as wait two of

So, we hard have XXXX, deliveries, deliveries, effect, place in deliveries, in we’re XXXX very this XXXX, XXXX, our XXXX worked already working on XXXX, deliveries. year’s XXXX XXXX to

are deliveries are to end half XXXX good are of a of do very really on for of that We So long-term back little aircraft will nearing completion have small airlines change. once we lease up these at certain first for campaigns XXXX. and in for signed already that And the very placements extent strategic of completed no have that will leases, XXXX, portion there’s future, the that and tail aircraft new the a those the XXXX in we XXXX. near held

the of already in traffic replacing that we’ve tapering least aircraft rather than least a efficient, airlines new So their economical placed. will planes resolve

John Plueger

the couple above numbers X% to years. prior Jamie. these your well Number Let above still average XX other X.X%, just hypothetical, to it’s well me add are in big if X.X% so over one, it historical the goes down points, X% a

bit So a taking second thinking them to sheet, defensively, they’re the high towards term. simply tends very drive our a it’s this percentage shorter drive about any on committed leasing to a airlines comment, Steve’s balance it the if actually to for tends in to because growth airlines, the aircraft addition they’re rate. opposed more a very, still as And own more thing,

material So our any for going reasons, profile we book these business really impact of or demand don’t foresee on a forward.

Steve Hazy

Yes.

passengers a Delta and adding Jamie, would year, X% Southwest of increase mean the would globally grow traffic over by together. little Next number

So just imagine…

Jamie Baker

more can that – So, it, much. appreciate understand. you’re Thank it down dumbing I Thanks. to you gentlemen. determine easily very I

Steve Hazy

Jamie. Thanks I would get that. know you

Operator

Thank you.

question Our with Compass Scott Valentine from next is Point.

Your line is open.

Scott Valentine

maybe little I for my worsening fact So past? facing earlier, experienced the taking I’m mentioned happens. kind higher the in the think passenger can… of kind the that you dollar, just we’ve I growth you’ve swelling, I compare coming does going you the team of of, guess is did Thanks cycle? that mentioned mean preparing Good mean, stronger hit what peak question. Do a to you what Maybe fuel, alluded bit? you to evening. the experienced. for of and challenges here you some very this down airlines, off How a

John Plueger

there very we’re the of The who ago. been much are think now XX and I you think, in about a over years we their certainly we’re think Scott, fact in view it’s environment. always of can a and industry, a but demand an reacting really capacity is, year anyone studied the XX cycle for much and is aggressively fundamental a to battered yes, an I that couple or OEMs what more what one, has and said for XX is managing lot are would an airlines discipline something accordingly. that of Number take cyclical in uptick agree I [ph] airline more certain the a in differences from XX industry

is to know really production we that’s continue OEMs does just and why, period has in the mean on this in new expansion being a focus globally, of by of before in mentioned demand increases prepared The in if strong said, expansion to such and cycle don’t the of that ULTCs know our we growth is legacy you middle class have second sort and the very seen and carriers. matched and of away. be we that. gone the All their a relative the which by remarks, lower that answer being rate so that big I business. fact the LTCs lower huge to Never to the continue meet will factor, and huge I being book by fact, this global provided is airfares

to a level time this certain fact, get which we’ll counting of probably on demand. over cancellations, In meet they’re

that resiliency and I of capacity and think there the different and So different the managing more aspects discipline strength some today positive do macro and travel passenger that of are before. make than that global travel and

Steve Hazy

with airline every I’ve Steve, is period Then international of last in them this tells months. And are from than that next CEOs anywhere they of CEOs. looking XX their Scott, over more X% forward are met forward one weeks, during last comparable were the them XX% three airlines me to greater three the all bookings year.

they’re So but are traffic XXX, continues to of be of fleets very robust. to XXX-XXXs the and cargo higher There’s cargo lot passenger robust. being remember package a a aircraft market not see out have the That’s a at small new a year, that retired XXX operations, the the mainline AXXXs, airlines. cargo. Yes, those oil than going to program coming prices that airlines off are and cargo, last for of year, conversion basically so to to we absorb market of lot XXX XXX delivery have much being you converted to least their passenger converted are

we So efficient across of not aircraft. saying oldest, hearing the we overall need the the our message may they’re less us telling us what airplanes seeing new accelerate we That’s retirement we’re need airplanes, and board. least to I’m airline

Scott Valentine

it book approves or to in I Obviously value. in is shares program. the stock I a near one Thanks there follow-up big for know board fairly any is XX%, repurchase the XX% dead CapEx term? think end that. the then dividend increase just of flexibility trading the Is at of focus your sizable question, And now,

John Plueger

a increase take why in think today way that very the and Yeah, with and, look prudent that’s the the We at to we but it are. dividend felt an where increased is And we our have capital we of results route looking allocation I very forward. company, decided seriously. we our right with you very was confident that’s along go we announced to size in grow felt the dividend, now

Scott Valentine

Thanks much. Okay. very

Operator

Thank you.

is Arnold RBC Our Jason Capital next question with Markets. from

is open. line Your

Jason Arnold

results great the on congrats Hey, guys.

on for here been delivery bit well you prepped up continued mentioned? of kind As next OEMs. you the can issues you’re you’ve what from kind and detail where delivery the speak half mentioned, concentrated as year maybe more still are about a the saying But you of in a and year over

John Plueger

Airbus as lot I Well, their facility you where still coming. and delays the Yes. know, AXXXneo are we of AXXX is particularly recovery, think in larger is look, a they with industrial as the going the obviously have that through are produced, Hamburg

and do met industrial We with Enders, a Airbus – ago. Scherer, a leadership Steve just confident has I We the have their maybe on and getting three, handle personally three weeks [indiscernible] that top Airbus, feel Tom Christian half situation.

that, and pain. degree confidence owns approach good this to he light a a his I at – said we us have think engineering end hands-on background some see the continuing it do real that – to high having fixing gave are just issue industrial the a they of of tunnel. But

We some coming. weeks, two the powered less even delays maybe three first quarter. with Boeing, in there’s We some month delay in also our again, our quarter in bit leap-powered it’s And second neos at MAXs. on thee the to a experience longer in far perhaps month most expect average a an only the a delay situation neos

perhaps the Airbus. end quarter and of program Having the the will – I at the my said confidence most more continue So resides the said But prepared these in it gives XXXX. through that the of of us light and as in a with of XXXX day, their – end results think at that of review our there with visits industrial first of is I tunnel. do remarks, delays we believe there that,

getting the and that the delivery time. backlog believe process You I do that the of engine that really think on on the sorting I have magnitude don’t the that’s Airbus more primary and through. now. issue to more problem appreciate deliveries is are

now, process, through and hopefully is prime it. those we’ll of but assembly the those think issue on getting handle look look, is just of from complicated going a think this most a a And re-inducting final into I tough. think and say delivery And over. that’s certification we – Airbus and year aircraft. a back that we is very aircraft it’s And

Steve Hazy

the the that items is of Whitney and have both from from one their a the one engine portion CFM in converted airlines aside of sort – of to of caused & that Hamburg this has congestion reasons AXXXneos issues Jason, AXXXs. Pratt many

also at percentile as AXXXs basis, primarily Hamburg of look brunt some the And of has ground a on program. a that’s Hamburg on limited historical you Alabama. and if is that body the extent But involved of the had much a take to the the to AXXX gaining AXXX production. supply the total very versus AXXX narrow of chain been AXXXneos which stressed very, has in increase, centered Airbus has component in that Mobile, rate So

is also that XXX-seat part more and activity. single-aisle us XXX of it that Airbus for more airlines as seat Airbus. selection to the a what to aircraft So our problem is the that see of Lease’s than of wanting cornerstone But AXXXneo it to tells Air a aircraft. have XXX XXX overall in Because validates rather category the we

Jason Arnold

follow-up. kind that color maybe coming then color. a $XXX mentioned loaded frame? bit if to Great you be would that, fourth little million the in back-end be delivery quarter. time going another And on deliveries of just helpful? provide of could one sense. I you a know make is quick quarter That there of Timing Or

Steve Hazy

to we’re we’re too of the provide It’s little now. That’s of now the mid just actually quarter you will function but – end where till right report with say OEMs, quarter deliver when airplanes Yes, looking of of right to soon activity close these probably as with an the quarter. late sitting a a we’ll mid quarter. at

John Plueger

Originally, few early of the those for. XXXX of slip very was difficult, in than Airbus to that the a is December. airplane predict, we new that the might And what deliver October, us little of into of Jason, is part got had today most And but the November, the for just first number inflow light in slower Rolls-Royce to Trent Airbus certified, going to AXXXneos quarter. we’re a AXXXneo. Yes, hoping the down engines possible it’s

Steve Hazy

at the end to the into as push deliveries add, matter also is Airbus natural for would practical and I it of on homerun a both year. a Boeing

there’s cetera. surge, a pressure, So stacking natural et of always kind a

that ALC insist doesn’t a have airplane want for for customers, learned However, impact delivery. to our our We don’t great many, We we quality. us. it affect years, many at on

So our assured year. our doing very the to does rest corners influence people they OEMs very, inspectors for job, their good natural make making quality pressure have. But business and no are for That’s the in just order not numbers us. a that cut there’s that a sure

Jason Arnold

They Thanks a Appreciate sense. deliver. Excellent. guys. they it. when Make lot deliver

Operator

with Our Helane next question is Cowen. from Becker

open. line Your is

Helane Becker

the Hi you operator. time. Thanks, everybody thank for

over no but you I think Primera, like So about my by aircraft those it, how next questions we That’s downtime? it one saying on would answered be guess, the was I that placed feel should of time frame, right?

Steve Hazy

We’ll those we the documentation on a of will be in those. we engagements on already as eight have those as activity’s works We’ve XXXX, place announcements number and well. got of making The already aircraft. deliver strong. three those in And

changing the some in of make final to been for great for some desirable those And specs to with So highly and lessees. Boeing them of our suitable the work airplanes the features are has aircraft.

in think shape. good So I we’re

John Plueger

Yes.

strategic that we a a set, problem. my a allocate do Because how want gets And just the really we this, do the we out, will do aspect of fact, few. who sense, how them have positive exact I in very same these not positions. airplanes, there there’s dole of of one following many have called I them. this, multiple these How in positions, of term, good have problem a customers, add in is for benefit around, why, good remarks, many Helene, them lot customers That near we we is is good those problem. of have it We those? and we that But

problem that’s such – really from customer of view an if a a like easy we So not point to everybody. satisfy because management

Steve Hazy

a By way an we that like who of airline way by where of done we long-term an of would a have have we – Lease the never customer with XXX new that aircraft, who wants Helene, that existing to we MAX then basis on customer Air same of have potential Lease business be would And have lease who Lease could it. customer take example the for airplane. Air and example, Air plane

interesting and make have some we decisions. very philosophical holistic So to

we airplanes? said, where John those do As allocate

Helane Becker

is no there’s accept also have if relative concern I’m you between – plans? there a the And demand wouldn’t rate different Okay. lease the to lines the no high, is on listening to correctly, lease because those rates

Steve Hazy

to are These lines current the environment along aircraft going the rate Yes. lease that we’re be in the the placed with all placing at time.

John Plueger

we’ve taken from the Air we QX only of Primera will up in that and with benefits them signing in that The would them. the that basically same that already have is and as differentiation is from Lease lease ballpark package delivery these is had that security Primera show rates airlines discussing up Yes, been

Helane Becker

Okay. That’s know. to also good

would So how us that or the rents on would would maintenance we how the lease show – account.

Greg Willis

other income. will [indiscernible] That

Helane Becker

Other income.

my And up to as you that. any or I that, over unrelated. are debt the other rolls able to debt, is Thank next being All appreciate rates Okay. and refinance then question you about you I about Greg? of it. two at worried for the all your right. of explaining But assume, go going four completely do years all think off,

Greg Willis

mean, S&P, right mid-BBB I now, we’re it’s A. an No,

we think access great have capital. I to

the think is on strong. capital bank strong. very are The side market markets bond very I the

We base, asset unencumbered have very low leverage. very a large

strengths investor. credit us things really these are our credit of and All really and differentiate from peers key attract

the So grade I access in good then of the going what mind investment far finance stands. our my we’re terms inside about in customers think finance, where financing, also I is in capital. of our feel to which majority And terms of market position to

Helane Becker

perfect. Thanks very answered. asked That’s and All Okay. my much. were questions other really

Operator

Bank. from with is Our Patel Deutsche Chris next question

is line Your open.

Chris Patel

answered well, to are questions already Most how were one. guys, was but my as you? ask going Hey I

strength in kind about and reiterating and guys customers guys deal the have of you your that deposits with spoken – security provides to how apart your that? at should package outlook. look there or forward about Is sets kind something how we of the about think that of of from confidence competitors your how package kind and you of You of you kind often are in kind able

John Plueger

lessors or have the protections I can I we try the do we our the package mechanisms sometimes I generally us. of to say would try think is businesses. lessors believe, competitive of airlines and I XX our here cash will cash with different levels in environment We I does us. these this, It’s out there would of of of security think, is that And package, differ and How waive a differentiate pretty and and benefits we security that speaking, have security just industry decent does phase ALC, the this would reseves good say upon run overprotection. seek. one disciplined especially, But we most other and there. I levels a say, insistence things. waive deposits – what differentiate But top

it. we’re because kind a to airplanes, tailormake still to we’re have packages about makes adamant still customer for position solution and strong have able work. very the overall we’re are we that looking make the of We And with that able great get an we it

Steve Hazy

Yes, have on reserves. security commitments we focus a cash deposits high receiving

fact amount layered top the that our metal of and a think biggest we credit of first foremost, diversification. , on the of quality have significant I lessee is

is Our below X%. average concentration customer

credit exposures. things I lessee So together, think, package from us really those insulate

John Plueger

from But advance irrevocable us well airline. on deposits cash very in cases, be in with that very there some at credit emphasis should a of an kind banks position deliveries high guarantees puts augmented hiccup in any net bank the strong large quality of

Chris Patel

I little – Then have What been kind in, defer that have are their XXX-XXXneos. to the wanting think further. Great. deliveries the example, French We’ve the have heard is deferred the the second aircraft? deferred are to they you extent they have my them of all a bit that in deliveries. customers question customers from some for we’ve that some around press reports And some seen

John Plueger

deferred. the referring a pretty has the our it And Rolls-Royce although the XXXX as some delay well. Rolls-Royce certain know, And you been is the technically I sure cetera, of to satisfy there performs on to, a same some, certification think big have From what Trent XXXX, The Trent But working the of to turbine problem XXXX admittedly, ALC, different in AXXXneos think, is powering make of there the has getting replacements. et customers product a customers hesitation blades, I attributes. XXXX is none significant you’re that Trent production, engine, Trent of outside

although lease hey, with sure. few So airlines not hold to a have been that has we want their customers or make this just say, on, happened

big this two – the problems. You about might has been engine the industry you same do dominated if look, for pretty had questions with last years

customers of are that for understand be that, cured. having airlines delays. Lease do that reluctant that can not believe specifically, has overtime, have said Air or deferrals. certain delays problems for asked AXXXneo kinds and not engine you So They asked impacted Lease’s will more those But have those Air to these airlines But that.

Steve Hazy

are and old XX AXXX is an And soon one are we actually them, receive the will scheduled the spring old. possible us AXXXneos with have AXXXs, are older two delay. economical. customers as Yes, now airline fuel the want It’s to they quite as none opposite. have in four is obviously different the any They almost case, AXXX low that cases, replacing, from desire which said, of airplane expressed airplanes years as And of to less XXXX. and between in are, that these because the where John prices

seeing to deliveries. not of we’re So these customers delay any on our part interest

In fact, soon Rolls-Royce Airbus as very and they are possible. aggressively as the to pushing get airplanes delivered

Chris Patel

taking Got guys. it. for question a Thanks lot my

John Plueger

Which reason an reason is another on gave is we – Lease Steve really replacement. This focus replacement. a just Air focuses on why exact

Operator

question Lynch. next Kristine Liwag from Bank Our with of is America Merrill

Your line open. is

Kristine Liwag

guys. afternoon Good

these you evolved the versus have For AXXXneo MAX, past how in lease NG premiums a discuss on and few years? aircraft CEO and XXX can the

John Plueger

introduced. now is When let’s, that other all lease don’t period standard premium. types maybe think time, a of Well, this, X%, Because why? new years lessens, to X%. as it, evaporates, been two have Over time into first into know larger a I what type call on, or it, premium they’ve years be airplane. but a introduced, goes there’s we’re that the becomes X% new that evolved circa as would I that

now AXXXceo saw The the it’s XXX [indiscernible] the XXX to lease behavioral in giving rise when rate rise as neo and same series. XXX. XXX and XXX-XXX gave So a exhibited exact the the pattern market to we

large So forward. going But is has new that, aircraft extent. and that, say premium I this to premium is we this – the nothing this expected dissipated and plan would has how a been the new

nothing particularly other new different aircraft this So than new is introduction

Steve Hazy

hours But down on hour to an an versus a XXX- a per AXXXneo gallon assume hours or fly MAX Christine, about gallons. you versus few a boulders that’s day, you XX,XXX and XXX say a XXX month, savings flight XX AXXXneo if average, numbers, non-circulated

we but at the of pattern, additional savings a gallons, So whether airline. So month XX, getting utilization the the revenue. the airline airline, have you has XX,XXX is that’s that’s of of a gallons, it $X.XX capability the At to premium XXX payload generates month a a $X gallons on depends it are benefit if XX,XXX because it’s range value that

a a of go as operators. from is premium, for And every but jurisdictions, into So lot it’s of there a said, John types customer different different factors with. different

Kristine Liwag

for And in deliveries XXXX helpful. what your is placement That’s and lease for XXXX? widebodies,

Steve Hazy

XXXX. for are We all placed

is in that And couple into airlines are with bodies XXXX negotiation from couple X,XXX XXXX. a have a We XXXX. of still in actually wide accelerating of we

Kristine Liwag

see in want to market the you for what to you order would lastly Great. for And me, XXXX? a to have

John Plueger

Well.

it’s new more slightly aircraft think One answer really customer type. almost two the simple. a broadened to It’s directive base and is number I is pricing.

Kristine Liwag

you. Great. Great. Thank

Operator

Crissey Kevin from question with is next Our Citigroup.

line is Your open,

Kevin Crissey

statement. mentioned on for Hi, and any the and didn’t taking a you everybody. thoughts Last update a look time I aircraft? you it XXX that your I think general was you Airbus if quarter your on at afternoon good know Thank had

Steve Hazy

Swiss of weeks. it to introduce that there is aircraft, operate Currently, on we Well, had Airbus Air, will as airplane. of lot the Delta with now few a weeks Air Korean a we number a said, in that and John lose Baltic, ago, a few airlines small leadership visited and discussions

would to more airplane. see like experience we’d So little of a bit

the aircraft We’re performance with reliability of the monitoring operators. the and

next dialogue And we’re on more airlines. XXX have evaluation having the those we meaningful of We aircraft. we’ll with gather and sometime are probably engaged early the more year, once data

Kevin Crissey

very much. you Thank

Operator

DePalma like Q&A back further remarks. I’d to conclude Mary the our that does to over today. Liz for call And for session turn any

Mary Liz DePalma

call feel now. it to That’s for we quarter. today. the everyone. again you, with the v Christie, you disconnect free our after speaking to the Thank line conclusion of fourth look forward

Operator

you conclude and all today’s may Ladies Everyone, have great in you gentlemen, thank conference. disconnect. program, today’s does participating This day. for a

Air Lease (AL) 8 Nov 182018 Q3 Earnings call transcript