AL - Earnings call transcript Q2 2019

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Operator

Good day, ladies and gentlemen, and welcome to Air Lease’s Second Quarter 2019 Earning 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 is being recorded.

I would now like to introduce your host for today’s conference, Mary Liz DePalma, Head of Investor Relations. begin. Please

Mary Liz DePalma

Steve welcome XXXX. Corporation’s DePalma, Executive This joined Officer. afternoon and the call and Officer Air Chairman; President this quarter Executive and Greg second is by Executive and to President; everyone, our Willis, earnings Lease for I’m John and Hello Plueger, our our Chief Vice Házy, Mary Financial Liz Chief

conclusion the XXXX. Investors the results and and today’s A will instructions given published participants of is today, our XXXX, for our this is the available quarter conference website. call for release we available at on this be of session. copy the webcast recorded X, the for website to replay listen-only on of section our of will be our in August conference www.airleasecorp.com. call earnings Earlier second today, call, all time, This Thursday, are webcast question-and-answer being At At mode.

call, in and operating please begin, items. the the we Before Reform revenues, forward-looking Private our statements without statements compensation future Securities performance, questions, and Act. meaning expense regarding conference note answers and operations within of limitation, Litigation stock-based certain income statements to your includes, are This expenses, this other including that certain expense

that our the differ materially risk more and X, Securities of results results. expectations. detailed could August the XXXX. estimates a to statements and affect These any represent and as our that to cause for with projections risks may of today, factors These uncertainties Company’s refer Commission actual from Please to management’s speak Exchange and filings performance, future as for involve only future results estimates description

in statements new obligation any forward-looking light or events. assumes to future Corporation or no Lease of Air information update information

adjusted adjusted In addition, and be adjusted before are diluted such will earnings-per-share measures during income income as using taxes return non-GAAP certain measures. pretax on income call before net taxes, equity, the financial

as and earnings recording our can www.airleasecorp.com. in as call Press definition at utilizing corresponding our today. for can the release the issued is conference reconciliation of both non-GAAP we to measures of our of GAAP this Investors release Unauthorized description and XX-Q these website of found the not section in A permitted. and the them well be measures This reasons found be

I’d over our now turn to like to and the CEO John call President, Plueger.

John Plueger

I’m Good Liz. report of Mary the and for half Thanks, business everyone, strength quarter XX.X% up first revenues you happy the of continued us. thank up XX.X% joining the for afternoon, with for our and year. the to

to the $X.XX for return to the EPS $X.XX with pretax half strong XX.X% and X.X% Our on grew year quarter and for equity. margins

delays second the one delivery quarter During aircraft during order our XX Airbus billion ongoing delivered secondary the in market, aircraft MAX our aircraft approximately history. in despite highest grounding acquired aircraft Company’s and and the book level of representing from $X.X which the from quarter, investment, is investment we with any

lowering Last billion. assumptions year $X.X quarter, full we the $X.X aircraft for investments advised to billion that we from for were XXXX our

for the which of aircraft $X.X MAX Now ongoing again XXXX aircraft any Airbus, the lowering approximately assumptions investments MAX we are by ongoing delays that due billion, for not and we to of for our of XXXX. to delivery taking will down end be delivery grounding assumes

look dependent United forward hope forward-place the I Frankly, not are delivery not that own, and This we assumption outside do ultimately customers MAX the of would are MAX therefore, is assumption possible. on is deliveries States our Boeing’s, wrong, regulators, as and to foreign recommencement I remind the soon you our as and our of as FAA.

aircraft to is safely know service. authorities are aviation industry, the customers. the in MAX returns FAA customers we fully that safe world’s outcome remained the that our to and airline do and Boeing, most important as has We the hard restore that our the the the grounding air MAX it and While working confident been is entire aspect for when tough the to

in So still estimate higher big for picture billion revised for XXXX investments ALC, let me aircraft XX% just that than saying XXXX. summarize is $X.X of by our

remain So for strongest track inception the since year of on we our growth company.

as to not As last fleet did quarter, in anticipated aircraft we sell and as on growth. the we we second quarter previewed any focused

are highly Our in-demand and fleet shareholders. young healthy returns remains full generating of aircraft, our for which

our strong sales we our do We shareholders. Consistent objectives second the QX. value for as each expectation year from the of consistent which with our with to into us foreseeable aircraft have for closed from buyers see growth Greg already to and every to this demand our continued will you we fleet maximize share quantification last future, further remarks. quarter, several allows our half of be the in and aircraft sales of provide his anticipate in and with tailor occurring which

activity, Looking rates. at currency expect, matters, environmental the economic macro are interest picture you trade and closely global as we issues, monitoring would

demand you over XXth experiencing previously, deliveries new on past AXXXneo based China, press our for we interactions to And our release our see aircraft overall are Sichuan you to with deals to no into you from as obtaining new expressed Airlines. have the aircraft. saw issues our our impact we aircraft we for with as China we As shared or June year for also yet to with date, customers on have have XX

if rates MAX overall and uptick certain speculate we lease an picture, It near-term single-aisle today’s grounding Airbus and seen particularly forward. the have, delays Looking demand rates, the shortage premature created on AXXXneo. by in lease going have to at anything, on MAX delivery strengthen the demand is the

service lease the to been of somewhat return has placement new much MAX. activity of pending muted our As

AXXX-XXXneo’s we and your Paris have would the to French an Virgin the call AXXX-XXXs show On Atlantic. with Boeing the three been experiencing. one XX XX placements the LOT announced one to side, XXX-XXs Caraïbes with placement the six with and lease Those AXXX-XXXX strong and attention KLM, placements we include Polish Korean, Show Air widebody and respectively, continued have with during I XXX-X momentum with days Air Airlines, good XXX-XX during past particularly Bee

widebody on cumulatively. very these with we our as are XX% fact, happy. are importantly, are rates aircraft In we at which of placed And today, placements

the at XX this a as deal agreement, significant a Air So aircraft. to we with launch partnered for aircraft. and Paris Airbus orders AXXX And orders Airbus and we added AXXXXLR incremental Airbus with XX firm part NEO XX with XXX of firm announced Show, the AXXX-XXX NEO ordered we

the for We of our all Look, book believe Boeing. aircrafts. five adjust strongly these also order we with XXX-Xs in addition

has over fly XX missions no AXXXXLR me X,XXX can Just miles range nautical with to also provide of to ability efficient let orders, NEO. up It’s our aircraft the and equal. view, the more these a passengers. to XX-hour It carry color with XXX. than XXX some this XX% start In fuel XLR well currently on to the has

We are [indiscernible] our demand already customers. seeing strong from

a brainer. was no aircraft this Frankly,

the passengers As much up AXXX under out. substantially further to continued ideal regional believe this little that and comfortably has more ownership it market we as aircraft the is than in delivery traffic aircraft are his AXXX, seeing embracing AXXX-XXX to on fuel and growth is more for to a ability traditional a passenger are relates aircraft bit in XXX-XXX. near-term Steve Airbus connecting or we this remarks. sold cities positions the secondary efficient where comment will an This carry is XXX is jet. It than

not strongest, of in our Finally, the the widebody if strongest XXX-X been has one aircraft the portfolio.

been get yet to all these additional placements ongoing reflecting not requests placements announced. lease have covered. for good They’ve five the -- continue are and strong We these units XXX all lease not

Looking ahead, we being see in of demand for face the headlines. aircraft is resilient global

-- to It’s more travel globally. for world’s inception, over become multitude affordable new been total factors aging to nautical travel ALC’s transportation In continues replace for which incremental becomes other demand form of driving has air have a miles has need jets. addition more the as focus industry the that since for the with aircraft, increasing connectivity to undeniable mass cost about XXX the of anything and of

This travel agencies. throughout technological disruption the by is being driven the

and in example, pulse industry, provides discussed advent and to driving which that real our marketplace the with our are airlines with the the conversations rental daily LCCs more with time hotels clear cars of airline Uber, dynamics the needs the the all as and just make and and businesses us traffic ALC’s For customers I ever. than such of ULCCs along with affordable our with travel Airbnb to passenger best it’s team for helps on aircraft. new

this, pace and continue a time at to result rates we both place happy. As we with and good to a of are airline which order new long it book customers our

me in what Steve? Chairman, our to now color to we placements marketplace. and the Házy With let seeing our that, provide call Steve over the further additional commentary and turn on were Executive

Steve Házy

We on we and operational outstanding XXX for in company surpassed Thank and much, aircraft we fantastic had fleets our now total as after already you milestones mid-July, a is in our billion more fleet short $XX two airline as delivering XXX John. nine leases. and build than our have class customers best Lease assets, in years. of own Air over performance very financial long-term

dynamic its Aviation given is business a nature. global

our we’ve a variables Europe. passenger prices. nothing rates and troubling manageable But But not currently speaking, rates prove our ongoing airline at thus in of for always, traffic energy some particularly low customers before. generally course, As is just a interest result of play to seen Labor, broadly delays, are as many few. healthy OEM name currencies, relatively that with trends, trade, and airlines, this

despite demand see airlines world. regions from from continue dialogue, all ongoing geopolitical And ongoing the to we of

we Air load up high X% of XX.X%. factor reported in overall fact, with kilometers highlighting International continuing compelling passenger earlier today, over XXXX, of of In growth months, traffic as past Despite a that still Transport revenue the globally RPKs, a few growth moderation IATA were passenger the strong load with Association, factors. IATA’s June find record

and our we XXXX. XX% in opportunity These an do at have of rentals. XXX is lease committed and many for replacement their forward the we’re evident and $XX.X and in reevaluate on lease result grounding $XX.X placements, to now The fleet seeing placements future billion, having demand given XXXX The aircraft has new ALC which see any healthy total overall of demand. through growth requirements, in pullback our continued aircraft stand evidence pause, a with the billion together not almost we XX% airlines aircraft reconfirm in MAX through

the at you, with Show, the Paris to made and placements made addition second we quarter. which announcements significant over we’ve the shared John several deliveries Air other In

placement recent to announced longstanding For a we fastest relationship. example, strategic in growing in and of one of Asia, Vietnam the airlines Airlines, Asia which with a AXXXneos two the have follow placement XX Airlines, of AXXX-XXXneos we customer which Vietnam

Airbus the in Japan be and what aviation LRs, teach placed additional we just of Lingus, AXXXneos eight we XXX-XXs to delivered new Asia, Europe, in In long the carrier two will to the two and Taiwan. AXXXneo which LRs, of Additionally, delivered new the AXXXneo AXXXneos range new first EVA version Ireland. flag first airline in two of Air of AirbusAXXX-XXXneo Aer the

that ongoing a operational of fleet network. As transition part airlines transatlantic more for extensive

which Airbus to U.S. Faroe the We of airline LRS also Canada. and airlines new operating Atlantic delivered the Islands. And we of in first AXXXneo also Airways, on we Portugal, one the three delivered delivered international the first Airlines AXXX Atlantic of to two Azores North

our we AXXX-XXX with Sky and dialogue to month aircraft in Canada and AXXX-XXXneo past the our Air continued our Americas time delivered with Chile. long customers placed two over three in Airline Finally, customer to the

just can across the So activity of globe quarter. a as see, great in deal the past you

for of unannounced on both aircraft we number number have and well for lease portfolio. In commitments as new a Airbus leases as a aircraft have in and used LoI of our addition, order, Boeing we

highly portfolio inception of aircraft but and diverse, maximize we’ll and of we generation targeted mix in have constitute across optimized that efficient a aircraft long-term high our broad ALC, shareholders. for base to demand profit commercial types will of a be airlines Since

gained order and decision the the AXXX seven in over our considerable six an for options XX more that XX Airbus aircraft the about this in inquiries or aircraft so course with became to the additional many had momentum clear past strongly for We’ve place months, has an marketplace. units. year us past It of to

and provide to is ability We routinely being important for are about aircraft customers. it really our our now asked this

recently airlines, commitment aircraft. including a Let just by AXXX-XXX. This remind Canada, Moxy and quickly ordered Air week most you last the Air into which mainstream me Airbus Air France, JetBlue, Korean David XX a has Neeleman’s announced Air, that AXXX Swiss, turning for is Delta, EgyptAir, Baltic, now been

So as base indications the strongest our always, airline we to order. take from of considering types customer our and aircraft global

our role position and confidence growth On order airline AXXX, of good these AXXX among we lessors the and many for our have their a order, new for enjoy Airbus’ with the the AXXX ownership for market XLR our leading aircraft. the and of ALC much with customers. we long-term in And

that, financing provide to quarter. with over the on to I update call activities Willis the And an during second CFO, will our turn Greg Air Lease’s

Greg Willis

Thank afternoon. good you, Steve, and

continue As on billion growing by John the – our revenues that This investments execute $X.X the XX% driven mentioned can in earlier, this Keep growth made mind, commitments are during made fruit providing first four was timeframe. in pre-tax we our half to we aircraft of we through equity. the revenues by plan year. the by by our years are see on XX% today, harvesting ago to team they over three which you and that return bearing growth

less than returns were with of minimal noting trading other aircraft revenues. represented activities, total in sales generated is which X% It these worth that

the both second the seven continued our sales to to the quarter year, the Airbus, transition bankruptcy. of aircraft half relating that impacted and in the decision had Our fact as that delays experiencing quarterly by to law Boeing is were during as well the the from we industry shift earnings second

bottom not period. second the generating remember, quarter. – that This of during security allow and QX The you of which a during more than were fact will that quarter, during first the we package, during And at loss foreclosed in in gain the revenue the QX gain offset covered line the the As first in gains fully more resulted the these aircraft end this transition from transition. than we’re quarter. the is these that revenue

Turning interest with growth increased fleet. in line expense to of the expenses, year-over-year our

these fixed have year new will come see very overall said, the the finance percentage our do debt, we layer to significantly, Given debt movement rate start much financing our new and we as of down cost the from we rates of quarter-to-quarter. high typically not of in since benefit composite That growth. rates on lower funds

work. expect fleet revenue Next, SG&A to depreciation to last similar track we the costs with Outside And SG&A funding long-term. quarter-to-quarter remained continues to in how growth of the of the growth line quarters. our three variances, growth over lastly, outpace

number purchases quarter we deliver the investments. that ahead, in Max will aircraft XX deliveries. This does in $X.X aircraft incremental include expect billion representing Looking or not third any

aircraft as strong. Regarding in anticipate as the that sales for market sales, second activities mentioned, increase of the John will year the used we half remained

our of aircraft to today. These the demonstrate will sales continue the value in that are fleet

targeting still the consistent XXXX, $X what at billion with around told during are you in beginning sales we We the of year.

to We the expect approximately $XXX million of these in aircraft occur sales third quarter.

when in we will we again report October. However, you publish our early update activity

rate matures points note fixed a rate including in to $XXX million financing at our billion financing to liquidity $X.X fleet XXXX. $XXX quarter, at of million second and in we interest a Turning in medium-term our XX completed floating $X.X X.XX% billion. the of the the that rate, to We fixed finance basis debt increase plus maturing issuance XXXX and growth in LIBOR priced two to activities, debt XXXX, during date, raised issuances to position

benefit grade are capital peers best credit aircraft access which investment attractive the from funding to lessor as our standalone class in compared continue costs. to and to us providing ratings, We increased

expect increased Our to modestly relative quarter-to-quarter The year. delivery X.X we have times target, of to though later equity below to return debt left continue to our to delays long-term still levered the us X.X this ratio modestly our times. to X.X under level target continued

and reminder, target aircraft a regularly sales. below above as of based target level is the Just equity timing this our and on a we fluctuate and to debt investments

fixed our unsecured We and XX% core debt debt. strategies rate of to XX% also financing remain committed roughly

the to the for call question-and-answer turn I'll Liz Mary back session. that, with over And

Mary Liz DePalma

the you ask time, We this Operator? that At we'll and limit would one questions Q&A. open your Thank line to one for follow-up. question you.

Operator

Thank you. Caintic first Stephens. [Operator of Instructions] from Our question Vincent comes

Your open. line is

Vincent Caintic

Hey Good thanks. afternoon, guys.

changes, approve the your MAX MAX First the guess that so global delay purchases question expect year. and has of of updated on this delays? of prior regulators I deliveries guidance with be gone the kind you experience the delay, to once pace appreciate would the from what for

John Plueger

take stores well again start of fleets to experience that type we There their – current a only amount delay. be will hard time production in really this Well, been to out we certain redeliveries the that will It's pace in will completed flying have taking effect had be. of as I of what truthfully, say haven't aircraft in to process flying obviously of we're of of – as aircraft say Boeing. already really delivery in completed by a

really and to happen example, will if It's hard will know as don't regulators estimate other require might or training. depend upon that foreign additional for much We some well. also how

really a is there variables, So Vincent. of lot

kind month, individual really weeks. It's from short airline. giving two And upon just depend each in months, different some pause one I timeframe will of you so a that six

Steve Házy

And will sit Yes. is Boeing’s cannot they're prior December to beyond back rate what adjustments XX-month, predict to we they this in get factor when and other September, we Vincent make the if the production, the grounding. is, as here of the to today further October, just was year, going production November, which plan

So factors And contracted when aircraft months extent will deliver. into of the be picture new delayed to all delivery. will those the enter original a what they'll from of

Vincent Caintic

interim airlines on to some drove there shifted that you've that thought Okay, have And been themes it on any In orders intermediate the with lift. with change? got the That's you the it. interesting any that XXXs, helpful. the Thank delays, that getting been views of discussions was I the some MAX you. having

John Plueger

working airline case by basis. case a are we on each Well, with

some other from operational airlines. more up with modify these on lease wet that scheduling to and hours realign aircraft the We've lift some dry also they a both carriers customers our on lined already of have their have. with leases to fly worked We of parameters their short-term for and interim

respect of the And of more subtype in question XXX. aircraft with found basically XXX, demand XXXX, quarter short your we the other In we words, order the this second this XXXX, year ourselves to of had we about then and XXX-Xs. of had in on XXXX

the felt the with So into Xs to XXX-Xs. we thing agreement MAX our that wisest five and Xs of do mutual Boeing, additional with to XX was convert

Vincent Caintic

much. helpful. Okay, Very so got Thanks it.

John Plueger

both continually and changes. book order with ongoing make we process And reshape an It's Airbus and Boeing. our

where is this unusual very really fleet nothing fine our So tuning composition. perpetually

Vincent Caintic

you. thank Great,

Operator

Moshe Orenbuch question you. from And comes Suisse. Thank our of Credit next

open. is Your line

Moshe Orenbuch

queue Great, got the same thanks. not and your I of XXXX that as both that's guess $X.X change the delivery. maybe of just the in expected I normalization the banks the other schedule did CapEx, made expected know a commitments talk billion factor expected into is and of the in pace of about but models you've kind of $X.X delays that. XXXX. billion How for

Greg Willis

expecting Moshe, as any With XXXX. and John in to and remarks we're MAX, have it’s now with our taken Right – said regards his Airbus Greg. XXXX regular XXXX aircraft, spread across ability original commitments those not we during to we regards with opening that from to contracted to schedule their our have narrowbody their last in reflect adjusted Airbus quarter meet the and with delays continued dialogue we've to we been the us.

And our schedule going to estimate continue as we on are it's Airbus been several when best the in see. airplanes now right commitment to well, have delays and these months that those deliver. reflected think of experience we you So side

John Plueger

we many year. is, airplanes take – as we Moshe if this can't Yes. line, Bottom have

the couple taking to best both years next be and capability still will working them Boeing. spread of with and so our and just them, over Airbus We we

Steve Házy

AXXX-XXXneos cancellations which The on had emphasize, of primarily it’s are that that thing products late, like – AXXXneo, Steve, we've Airbus the Moshe, the not the for MAXs. any are the to I one

it's skilled have with of customers, their in all dialogue all walked people So the commitments. are leases and though, ongoing not from even tax away an our

Moshe Orenbuch

it. Got

So it's timing it's will those one of just leases – essentially essentially begin.

Steve Házy

Yes.

Moshe Orenbuch

tell the if the the been have context, could the had would the had rare you quarter, similar books been a been the what beginning benefit on us and the QX? or impact in the beginning of placed aircraft In of at at quarter

Greg Willis

the but with name, think portfolio to the give going to can where last a been it individual rentals don't year. line was specific say attached I in I that we're would've yield this of

for So giving I if you – would've you wouldn't at year-to-year, seen without normalized have number, yields, so they a specific a you change. been look our

Steve Házy

there demand, understand the many thing. but a situation reconfiguration airline sort these has in across very And Moshe, the busy that MROs high of be of actually to when with aircraft and with have out world they are were very aircraft. come very, an closing, different

of strong matter a man just timing. placements really fast. our and it's very was so were the Certainly, And very

Greg Willis

a on from new the of [indiscernible] deposits from had we reserves retained of these and cash cash And deposits And paid the airlines position, all we course, leases. all then that new of

of basis, cash we any a the impacts on really see really didn't So company.

Moshe Orenbuch

thanks Right. much. Got it, so

John Plueger

from thing it's – a then And think you normalized, whole year-to-date six-month the year-to-date I I mean, right. if important from is perspective, look a

in have the ROE. a geography, little XX% pretax P&L year-to-date, – merely it's You but resulting timing

Moshe Orenbuch

Thanks.

Operator

our you. of Thank And Catherine next Goldman O'Brien question comes Sachs. from

Your open. line is

Catherine O'Brien

afternoon, back, Liz. Mary Good and welcome gentlemen,

question just I So one I more the apologize. guess the in MAX,

lift that deliveries your a you've already disruption really to efforts strong, you short-term how on that. the offset get redouble XX% efforts I community when aircraft? place those they about still four placements do you if any looking the of lease farther MAX then kind their on think out. couple could questions But realize years anticipate do if I on of you there's the guess persists need pause a impact I So that of having longer? And thinking I guess, much forward kind placement for think take that? rates you of grounding maybe out? two leasing narrowbody such alluded Or for are placed to are a placements of just

John Plueger

correct, generally also and stopped. speaking, haven't this my back time, the said, you I it's comment closing airlines flying bit need forward that to is say make at people forward safely. Suffice airplane But to as little muted, premature speculate up that They say just aircraft. to rates. could did placements opening a imagine, as MAX I is on in Yes, these I our just because same sure is – remarks, your want a

certainly until We have clear. been a ongoing sky few is dialogues, but muted the they'd

Let add MAXs on contracted here. me separate should lease. the that delivered already we've have and a that been comments couple two the one, categories, aircraft in We already aircraft of

other airlines those terms. to are one. committed to on any of specific demand So we to those To of understand that, deficiency commercial of will and customers extent aircraft, cover that the any dollar arise. point Boeing number That's levels might the rates concessions, lease that look please every will

that a Air that down we aircraft of Secondly, intent have of XXX Boeing there period that for not in certain Boeing Lease again not will had family. It for yet and might placed to extent a time, confidence suffer the to is the we softening the with of be bit sit having issue. address

Catherine O'Brien

color. I just short-term? you'd for Greg, in think – like interest what do next one opportunities rates, thanks the the And have much of of the then rates clear, refinancing so maybe Thanks. of you move XX X the kind do Hey move fairly be to to in lower advantage low recent. take guess for over that course months able you months? But

Greg Willis

quick we is tied has target that's mentioned to credit and longer-term impact. direct to earlier, down plus short-term Also – think that its revolving I facility, I rates worth, lower basically floating as are Yes, X.XX%. have rate XX%, of significantly. very And our our its LIBOR have tied come rates which a

our than are beginning to the our do points of at the rates as to and our new the as were they there basis XX well all-in out CapEx, XXX go we basis refinancings issues year. when points fund lower So

savings. on, as definitely I to we're think So have layer interest we going expense an

Catherine O'Brien

for time. Appreciate that. Thanks the

Greg Willis

Katie. Thanks,

Operator

JP our Baker comes And Jamie Morgan. you. from Thank question of next

is open. line Your

Jamie Baker

have questions. I Hey, good Mark afternoon, and of couple everybody. a

Catherine’s aircraft up that could don't on around XX% XXXX. on First, unplaced you afford any metric, color placements the ordinarily are commonality? We families XX% through some year, about the following this next ask but

John Plueger

of for in the signed. that LOI which aircraft we add ready for to XXXX. airline an backend this Yes, These and XXX MAXs, from commitments XXXX are be

Jamie Baker

Okay.

John Plueger

hold ready fourth in sign had airline of was the to deliveries question XXXX. before fact, of March. commitment. decided In airline those and off that commitments Then the in end the primarily These the on to the are grounding we quarter

Boeing slide the cannot extent, plots because the if up, So XXXX. delivery actually into catch those is conceivable, reduced that it's production rates, to conceivable, will it of

And that a XX less and XX recovery really get currently. to to they're the month depends in building rate Renton that back on the recapture to the aircraft

that of XXXX situation. MAX that a again essentially of very number negotiation that right it's AXXXneos a are under In are we then with small small now XXXX, and So explains that quantity relatively airlines. various airplanes all And have unplaced. AXXX

Greg Willis

or being placed. would no add are aircraft I big taking Jamie, a neo There's just that So on widebodies picture. or category of not, class of or MAX or posture less

even color pretty with We are MAX Steve still these lines, and across the consistent gave on that.

order in just So I competence our very want book. to reemphasize have strong that we whole

Jamie Baker

for That's Thanks the perfect. disclosure.

but in of I from of a how were bit industry, global enthusiastically also about today concentrated some data you've IBA carriers. the in global but and lower, looking and are beginning earnings to kind spoken you more airline profits six in spoke so airline watch about question, that months earlier bullishness How showing know Mark the at number I growing on and a that Second customers? overall trend select to versus remarks. contradictory to changed? you It your ago, your maybe of are specific many now with thinking are health just spoke how the prepared how would or seemed the somewhat list

John Plueger

Yes. I'm to Well, comment. happy look,

balance. of are modest our in raised total And you you level all, arrears. have and questions quarter. of But on having if tell two total XXX-XXXs First record I say we don't fleet. lease have XXXs Hainan, in specific returns receivables People normal can also our with for are scheduled but any about for fourth our issues, that the comment well and will, Hainan. arrears example, level We those of two just I'll our two the the exceed XXX-XXXs, their commitments example, for very security packages

progressing are those returns. with the on We airline

in to have We're place. those XXXs of second. the a We close place the first

And at naturally just XXXs. you of of to that reduce with back the whatever experienced So levels start as or look will the the it of there two since outlook, have, and Corporation, grows Lease speaking, size we to broad arrears as ILFC our exposure Air a company. receivables

Ours of packages is the – who money of may us. with as bit very what all to they are and airlines security who Hainan companies owe overall ask a a may little case the but the and rest manageable, well-covered low

Jamie Baker

could before I just John. one the If for went because third – I to Q&A. you missed could if a in just I Greg, And thanks remarks some for right your that, squeeze of

So cap source some aggressively basically, debt priced there just some commentary missed level. on Is said your is there. I that funding or structure bank air role bank unsecured focus you pretty of think secured the for some castle your in I XX% data. a

Greg Willis

Right X% assets. have about debt we to total secured now

above Right an funding cheaper on in significantly is basis, the Our to as XX% as market well have well unsecured. fund unsecured both bond the target we We're bank that. now, market. can

now right or financing. do any for is So no I there receiving secured we're feel incentive us to like compensation not

Jamie Baker

me sneak that Thanks for in. let

Greg Willis

Yes.

Jamie Baker

me Thanks Thanks, sneak that for letting in. gentlemen.

Greg Willis

No worries.

John Plueger

Okay. Take Jamie. care,

Jamie Baker

Thanks.

Operator

comes question Helane Cowen. of from next Becker our And

Your line is open.

Helane Becker

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

Europe in wondering Asia your a other I like versus to to your of kind distribution, want you grow have opportunities are for about – portfolio that's seem okay. Americas. you here's in that are where for opportunities lot exposure. you for to look to I markets there ask don't your I'm or geographic my of seem underrepresented the When distribution, So grow And question if you, those to MAX, you. markets the be if at there

John Plueger

mind As reader. usual you’re a

Helane Becker

I? Am

John Plueger

Yes.

So is the yes. answer

and initiatives be announcements very campaign And We U.S. very, have will leads soon. a both number you the of Canada. seeing in

little up our bit laws of ramp a the a American and U.S. new to foreign in can tax for will take corporations versus going our us domestic course, North are a we for business. asset business And that So additional also we U.S. asset. depreciation benefit

Helane Becker

Will rate it tax your adjust well? as

John Plueger

that be exchanges. has $XX.XX use can rate with tax tax place It it. of the just profits we in the It's to the of do tool timing of loss Now in will neutral. a

Helane Becker

Got you.

John Plueger

headquarters Kong are Kong here. the that the low-teens. and opening a a -- government we Ireland, will by heard Kong strong Ireland, X.X%, I own But that’s lot in Hong for up incentives the in on – of Hong also do rate, and be lessors we at in we’re office assets there’s and that, taxed would to tax before, comment our have any us China it’s office, tax even Hong of you’ve a about

U.S. So the as North your in and do and do. lowering place increase matrix. business overall Helane, ownership to We bit a little rate. see of the percentage American But corporate to a which gradual intend business Kong, our we our XXXX in grow you answer first assets we Hong overall and XXXX, in tax question, will envision

Helane Becker

Okay. Thank All That’s had. right. That’s I that. all really very you appreciate I helpful. much.

Operator

Research. Valentin from comes And you. question Point next Compass our of Scott Thank

Your line is open.

Scott Valentin

I Good afternoon purchase know you for second regard With question. market, the to everyone. had Thanks quarter. one secondary taking my in the

you’ve body, if demand maybe age, it well. I’m counter mentioned, you and in that’s of Just attractive. what wondering that do good maybe you hear you see view aircraft that’s what how Is wondering to you true just or market. wide some the maybe of it what And generally seen aircraft for secondary speaking. – being as market segments kind pretty types

Greg Willis

Well, in when arises. we opportunity We always order inception have in times see purchases. pounce the look right used and book don’t even aircraft ALC’s strong We any really major seized – that since opportunistic upon Scott, now. change

good The really and we change. So we is used aircraft for no too, mean but there’s here doesn’t strong, deal it. seize can’t find that marketplace a upon

or there’s exceed no seize no that things we really – say These just always just at change and anything look There’s change would we no really just are that. upon. there. I any like that So else

John Plueger

used used emphasis selling be aircraft, our used But – buying vis-à-vis primary not aircraft. aircraft, in will new years, next few the

Scott Valentin

just Should just it a Okay, compared as lease that. slight yield it some the then for of flat thanks you been downward due, the have year look overall the with ago. be we do I for question repricing I’m trend leases to how trend. was out And coming a – think would wondering rate there. was you older to, mentioned, factors aircraft, adjusting wild expect

Greg Willis

yields see expect as Those as over flat we lease changing portfolio we age the our metrics term core No, portfolio remain near-term. and to remaining. well our don’t

John Plueger

are may lease and that because a XX are the – grow bit lot average leases we’re fractionally, little remaining anything, terms. of delivering If and year a booking between term XX

Greg Willis

my ordered that you, in we the which on we and when strength marketplace that I particularly seeing I in remarks just for is would are good commented a remind AXXXneo more. XX

Scott Valentin

Okay. Thanks questions. for taking my

Operator

you. our next Deutsche And Thank question comes Koosh Bank. from Patel of

open. is line Your

Mike Lindenberg

you going the Patel. or a them body of cumulatively were placed. know and your placed were certain about say the Mike comments a you here. missed, talking wide in did ones through your two I widebodies you you said through about year. on quick if placements, you XX% comment Hey, placement. Koosh John, mean I strength of by you made it’s Lindenberg being Actually, – were what they the if in don’t when Did

John Plueger

Cumulatively. Cumulatively.

Mike Lindenberg

Okay.

you… that’s what So XX% of – what

Greg Willis

an Have order.

John Plueger

what That Yes. on we have order.

Mike Lindenberg

Okay.

John Plueger

XX% book of order placed. – our XX% other In widebody is words,

Greg Willis

had XXX, a And XXX a AXXXs, all AXXXs, Mike, So lease And have given lease and Mike, announced on let’s XXX-X say, those those point contracted. still than at a planes less placements. placed. including we quarter order widebodies in already of be not have we time, to XX

We’re not percentage. specifically that’s them, all but our overall announced of

Mike Lindenberg

on – rational part I reason very actually for I think of or the not to ask that it. for Europe hoping feel have on like behavior and And my something are be sort I That’s Airbus there’s But to and different like, And going on Boeing. I of single Airbus this, most getting tariffs then whether helpful. on we’re U.S. whatever industries prevails. part, is the suppose closely that feel trade aviation day I watching because question, new tariffs imposed, mean, every walk, and the wars second Perfect. hit.

Airbus would say, you would that airplane If be deliver to that Ireland respect subject were – with an work to your Office, tariffs? to on around to a be

John Plueger

No.

Mike Lindenberg

Okay, okay.

that’s… So

John Plueger

airplane lose There’s importation into Hamburg. the no aircraft to of our States. United the from an [indiscernible]

Greg Willis

aircraft jurisdictions that in out is make And all do. upon it’s figure on are our already leases of made. lessor And importation based I the in duties to where tariffs and there’s including require the they – for the any where process. based and not It’s Right. in domiciled. the or right various airlines it various and way It’s a Russia, the airline assessed that mean responsible tariffs place China, locations now, be

John Plueger

duties question the into later tariffs, this into And Mike, next ongoing China first during aircraft your the including deliveries year, first Southern. half of of we then and on of part have this in and XXX China, year continuing year

Chinese delivered We a AXXX recently an airline. We have AXXX. to

that seen the of want not committed have sort negate any have from we importation that So government they Chinese declarations aircraft to airlines any the of to.

Mike Lindenberg

intelligence. That’s actually great

I Steve, your Kong, the I Hong going when first kidding. it’s take guess this So presume. you to right. I’m Comac CXXX,

Steve Házy

ferry York invite on between flight, leave Frankfurt. the New to cash Deutsche We’ll that you We’ll Mike. that Bank and

Mike Lindenberg

All right gentlemen. Thank Great. you.

Operator

you. Thank

comes Our question Kristine Bank America. of from next Liwag of

Your line is open.

Kristine Liwag

afternoon. Hi. Good

John Plueger

Kristine. Hi,

Kristine Liwag

their thinks lease to adding to sleep orders. currently Steve that aircraft the sales aircraft. campaign, AXXX type And you ultimately, your a discuss expect and aircraft to sell percent about fleet? when expect what can AXXX airlines of of the fleet together? aircraft for you this XX operate do new you at XX% you and airlines think What do lease to John, about that ordered, or Do you the family. how profile of And percent Bombardier them, AXXX

John Plueger

said you whole a lot. Kristine, Okay,

of trying parts question. just Can of again, what the We’re repeat – piece piece, your again. like to you by write down what your what percent

you to lot. whole can trying a it We answer, repeat please said slowly. You were but

Kristine Liwag

trying was lot out I questions. two of a get to the Well,

But as So could. much pieces… I squeeze was to as I the trying

John Plueger

you If one third me the Kristine… give

Steve Házy

the third one. you pasture give of We’ll

Kristine Liwag

Okay.

So lease a together, What how AXXX adding already do profile and kind airlines And how fleet AXXX ultimately, this percent deal? lead do at So type expect portfolio? the you of do family? the fleet about you their joint Bombardier new to this airlines, many them like think then operate aircraft? of to expect an to of

John Plueger

Okay, good question.

XX an that are That’s just we the XLRs XX and which AXXXs on order. ordered, on XX AXXXneos. So add

the backlog all source. largest and among that have order for We the AXXXneo

those member or of the the already to go AXXX family, of either So neos. who aircraft ceos operators, majority will some have

commonality integration, So the will of in due be relatively lot terms the to commonalities. of and cockpit easy those systems

some and cases we’re focusing AXXX, the need in XXX AXXXs, and XXX. airlines and XXX-XXXs that even XXX AXXXs On and to on replace

so AXXX make aircraft, looking airlines replacement sense? to LR. to the And longer we’re their XLR operations range that want whereas AXXX Does open a the up networks at to are more and the as XLRs that with

Greg Willis

program known I can’t the were So if what we we’re just let new and number believe get to that’s Kristine, new new customers add me, get we give a for. – strengths new and is speaking, here. one of I generally me – you to side, on we, bring the to percentage buyers And definitive and aircraft But any haven’t lessees.

be the was percentage I new. So AXXX, currently existing be operators. think to as what your to what question would And would AXXX to

dots, But XX% generally that indicated we to so no a replace has speaking, a than you those a we new to AXXX. that anything to done outlook of is, but big will of be XX% our else combination And I’m operators looked XX% And with our probably placement really with connect with different to handful telling have terms both. be two an aircraft would existing probably number a replacement will mind, as then new haven’t that customers AXXXneo, or will of XX% placements as in maybe of in on. operators, of the we of it’s AXXX take message ALC Steve for

Our our mission and Airbus customers. industry value in primarily bringing into the to is new

Kristine Liwag

was when it have you, more And you helpful. known the didn’t Airbus very That’s the And it. to behind wouldn’t as aircraft. attractive C-Series, the became order you ordered with the style AXXX otherwise plane,

the deal the do happen you next become a what in the it how view new would close attractive order? Embraer to for have aircraft again doesn’t and to And for that few in EX, to if Embraer with mind, months? Boeing the you EXs So

John Plueger

XXXX, at the in profitable neos, of experience XX almost profit. But handsome and We early the other of opportunities wonderful should assets arenas, some successfully. into those all to then that them a expand because EXXXs we and we a widebodies, the exit we felt did in like so had EXXXs XXXX. XXXX, Embraer we placed Well, Air Lease’s programs. acquired were those the new And history and

various even we carefully EX, is look But regulators. question and the evaluating Boeing at the to is will the finalized approved open that by once always marriage a and certainly are mark. We now Embraer right more the EX

now on so more AXXXs. And focused we are the

Kristine Liwag

that remarks, to due guys XXX rates in prepared is? you much premium the mentioned issues. quantify lease MAX earlier in you you’re the AXXX that seeing Can Great. a And how your family the for

John Plueger

to somewhat, And Well, not we you, would ground but like, in say I premium AXXXneo not would trend in I a and we’re there had Kristine. prior to the disappoint it’s grounding, think with MAX going only specifically. only specifically maintaining, increasing. said Hate fact in I to AXXXneo, to already look the say but that been trend the that that that continues was just quantify, strengthening MAX

Kristine Liwag

you very Great. much. Thank

John Plueger

Thank you.

Operator

our And you. from Seaport comes Thank next Sullivan Global. question Josh of

is open. line Your

Josh Sullivan

Good afternoon.

John Plueger

Hi.

Josh Sullivan

commentary, the are market anyway widebody the any elongating that XXXX I launch mean, you any to timeline? strength? Is in for the on expectations market seeing Just contributing impact widebody to

John Plueger

announced a that make clear. have to related of XXXX very, order. any don’t engine a the to development. very has We is I up year, on need primarily already Boeing to delay

that’s this a are not at watch, invested but in time. that So just we we program

Josh Sullivan

widebody capacity. not it’s impacting But on any decisions

John Plueger

oldest what in said XXX-XXXER, see the AXXXs. think before, retire, I larger generally yes. XXXX and timeframe, a is, of the the mean, see XXX-XXXERs, speaking you’re as any XXXX I lot to we’ll I going youngest XXXX, remaining the widebodies Well,

acceleration to so XXXX have widebody. replacement see And may I fence do people going a little for suspect by need, been we’re that of the to nature may of the that who And look a alternatives. bit on

Greg Willis

thing that with in XXXX, the would there that airlines out due XXXX, the triple those XXX-XX. to extending to are those other expect get then delays to XXX-XXXERs is leases, timeframe, The expiring. as in any XXXX, if leases we We look

Josh Sullivan

the GTF AXXX. having choice impact on the a just then in you mentioned valuation And the some on or you’re on strength engine seeing, Is thanks. any that haven’t question LEAP Can versus market. differences performance there. comment Okay, the any you

John Plueger

what a airlines lease depending their made in either by of choices lot have are. the what see Not are their other difference those components really, we capabilities the engine on rates, don’t fleet, they engine a maintenance significant And way.

same discount or GTF premium the a seeing Pratt really LEAP not ballpark. pretty a we’re or Whitney much & engine. They’re for So in either the the CFM

Greg Willis

is yet Neither engine perfect.

Josh Sullivan

the Appreciate it. time. Got

Operator

question you. comes Stanley. Thank Lalwani Morgan our Rajeev next of And from

line Your open. is

Unidentified Analyst

actually Hi, quick with all in placed aircraft U.S. regards John, getting Rajeev. think are with of additional for you touch requirements? regulators John outside any gentlemen. those on to ones, I on been the the of of MAX, mentioned Have Two you outside It’s the U.S.

John Plueger

is short and going is, to but this yes, The answer – under comment. discussions not confidentiality we’re just were we

for and to we do We’re are of rest think hoping own we’ve that made made progress our assessments the as good but the deliveries progresses that being our is made, year.

Unidentified Analyst

the another Got on fair – that the AXXX, the it then, given just so it. demand, the And NexGen question narrowbodies. obviously, is to other rates of AXXX to healthy similar say sort garnering lease

Greg Willis

hear you. We can’t

AXXX? said You

Unidentified Analyst

Yes, yes.

John Plueger

it is – again. say So your question sorry,

Unidentified Analyst

narrowbodies? to NexGen AXXX rates No, the are say fair lease to comparable other no. it Is It’s okay. that

John Plueger

with that to better going portfolio the AXXX. believe current We equal lease we’re factor rate or or

Unidentified Analyst

guys. Got you it. Thank

John Plueger

Thank you.

Operator

I’m Thank you. turn back questions showing like other to no call Mary in closing to Liz the DePalma queue. I’d currently comments. the for And

Mary Liz DePalma

can Operator, look you call. now concludes of the again That everyone. you today’s to the after line. quarter. Thank Okay. everyone We disconnect end speaking the third forward

Operator

and for you you. Thank your participation. Ladies gentlemen, thank

Everyone great disconnect. now day. may You have a

Air Lease (AL) 8 Aug 192019 Q2 Earnings call transcript