AL - Earnings call transcript Q2 2020

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Operator

Good day ladies and gentlemen and welcome to the Air Lease Q2 2020 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 follow at that time. [Operator Instructions].

As a reminder, this conference call is being recorded. to conference like host to now Ms. would turn over the your I Vice Relations. of Liz President Mary DePalma, Investor

Mary Liz DePalma

in the on Hello, of A everyone is and This recorded on and by call and for website. our welcome am be Steve to and website Air second their I Chairman; participants webcast Please of Lease Lease Financial earnings the conference team Hazy, August quarter our XXXX. this Officer to Thursday, mode. each we of at published a today, will Xth, is and XXXX, are in Executive respective Willis, in second John is At call this Chief available www.airleasecorp.com. Earlier Investors section separate this This joined of the and Greg Mary today, our the Executive DePalma, listen-only member Executive results being Officer. replay for call copy for Vice our is President; the all location President homes. webcast release speaking Liz Air quarter afternoon that Corporation’s XXXX. and note time, Plueger, earning today of our Chief our available

call However, the the will we be the conclusion to format given of for which remain the expect the including at session, same, of Q&A instructions the call.

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

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

earnings call. Before a to our it quarter as to make proceed, announcement we relates like third would quick I

end week earnings has normally the Xnd. third the of quarter Our scheduled call towards would been November of

like press third However quarter. Monday, the Executive to call given to as would over November call to Officer Xth. our that week, election move after the our John we quarter usually, of the third we Chief conclusion turn the presidential President, will is will I call and earnings I Plueger. release now details

John Plueger

to us. Mary I'm thank you and today performance. pleased for is good strong another everyone of joining Well, thanks, afternoon financial reporting Air that share Lease and quarter Liz,

$XXX with million, income year-over-year. XX.X% by of to Our net million year-over-year revenues for the second XX.X% quarter up grew $XXX

generate navigate of last continue industry in an strong the May, XX.X% pretax to Since over continue Our and to airline on call the margins for $X.XX, was and quarter has share diluted quarter second the through returns earnings fully earnings extremely second our unprecedented up we equity. per environment. last year, difficult

commercial Eurocontrol early Europe reported than the as compared times are of signs reached July than was April. to passenger of compared And have advisory that fleet U.S. end Department State domestic We of world's flights improved. early pandemic, were passenger daily of checkpoint recovery. avoiding of the aircraft States, roughly where international In was U.S. to today the of which two-thirds been this China, just in its stored. the the seeing have to the service at In of that XX% XXXX as More nearly greater mid XX% TSA XX% significantly April world's United and ahead levels week seven of number XXXX this April. terms in the on levels lifted Tuesday travel. flights of in eight

long cash where those basis. to region of have very on compared all While are when updates schedules deferrals, with know way remain collections, many the adjusting we're are And go. on the dealing a of the airline bankruptcies still each. and how to focused each progress of airlines a that was pandemic, we weekly lease We at start you status

$XX from than agreed million payments. me less let When in approximately then, diligence help. XX% over granted XX% of to in we date Since payment you of of receive amount XX% May. The to the deferrals at lessees defer accommodations May, amount three to a request start To in of really these pace early update agreed the million payments. lessees we have we to level lower which to requests an need past months we slower agreed spent each defer the speaks time in million the understand So to last COVID we with accommodations lease deferrals, provide total, matters. quick and customers our with of the our reflects which deferrals lease lease we on incremental and $XXX spoke in $XXX additional to our to had approximately to have granted

partial most in are due deferrals repayment quarter, XXXX, As lease our typically I short payments for a first deferrals shared with the second quarter and period. last of

XX granted be over repaid months. we the next the will fact, majority of In those

Our team is our in are making believe And customer do to is difference. appreciated. and each support airline effort seeking to addition elsewhere is a making they a that best help the we concerted for

Our are largely arrangements by airline abiding customers the deferral in place.

in our operate and for month our such, XX% month in collection airline our strategy modern want young, and negotiations second We of As focusing quarter a as asset April XX% they aircraft. were was our to with fuel-efficient collection and our respectively. XX% first for made and has rate on difference rate the our the respectively, discussions XX% to at believe quarter compared of which aircraft customers, July

deferrals. For cases reason in extensions many this successfully along with negotiated lease we the

to the of done agreed first their in [ph]. seek also their is the support expect governments, and and this trend to to And this going mirror other many that terms rearview the of understand are -- financiers of forms to with that many have we we deferrals in Airlines et part cases round out reason forward. stuff. for of still some negotiated you of work that look Now how we all have in cetera, know want

at start constrained far. by traffic, That many received are now passenger believe measures. of were speaking here our the most levels still pandemic financially they support and they additional this customers said, airlines positioned of so As lower we today, given sit the are liquidity of than some better we have need

another reason, to limited this deferrals customers. for see starting For from are we requests round certain of

was than the inbound it far, requests So for the much is of I volume lower can tell those initial requests. you

of Of can evolving deferrals course, of status change real are the day-by-day. the impacts and therefore COVID time

today forward. total at Our quarter, strong only liquidity through deferrals of of moving X% second represent our the the footing on us placing position end

file which point, of working our filed airline. remain bankruptcies, are Virgin relates Aeromexico, would Atlantic, Atlantic, this do aircraft a that of aircraft for no the Aeromexico. remind about expectation Virgin of Bianco, at had package five June. we effect, Chapter has each under a the to Norwegian, or likely end at ALC Also, airline Thai for voluntary is stay I will have at Airways. you've reorganization. aircraft and with in Aeromexico longtime it pre our and restructuring read customer been As LATAM which XX We we At you with

aircraft have that no at airline today. We

have scheduled for aircraft XXXX. delivery body we wide through future However, do

ALC as the such planned deliver restructuring of airlines of with the restructured Virgin both the sustainability deems intention in airline fleet. goals. full participated their stress. ALC just as a fully back we young As and Aeromexico new in integral as aircraft to This aircraft to of do to being aircraft our keeping mentioned differentiated about goes point in we I Atlantic, such Many aircraft in times see and those and our expect environmental the case times recovery their

the of we the As on the last month such, into the XX.X%. originally health At minimal of We're than our cash were impacted. quarters. the which to in investments our July levels expect as slow of to revenue that same of would aircraft growth first call, we course, we On hopeful impact with our deferrals, we will flow was second you dependent result deliveries investment second seeing also be utilization and aircraft $XXX how to the line get continue continue seeing the deliver are rates, likely in is told ultimately environment but on of quarter This our was our as pre that and quarter. continued million evolved. line largely future pushed aircraft expected quarter, level our in for lower COVID, the while of time,

placements due MAX lower than from number in As return of Obviously, that the resulted may We such, year one scheduled in to aircraft of about to months the number has continued although billion, delivery be delay our of more delivery the half our service book being for quarter. investments the aircraft that further of could the $X.X we MAX delayed. our delays. in order XX second be took only the second anticipate a

In months. positions fact, delayed we believe majority the that XX be our than of forward order MAX more will ultimately

Boeing MAX days and look at basis. released address will a the a of deferral and the to MAX on ago, the case-by-case this with few year. or work their proposed FAA continue Directive. the delays certification We hope customers of to for Company that We our notice Airworthiness to rulemaking cancellation And FAA these just occur

you delivery one MAX that customer. of want to only all we of to is airline forward ALC's a remind U.S. However,

under year of many less by from the significant all see somewhat stress, and and that EASA and skies. once the the leads end most achieved the announcements safe are tested it that be have do will Airbus, expect still to confidence look We uncertainty. be one as both like including China. well it returns, regulators, as by But of flying certification we We can aircraft this second the MAX foreign as will return you further Boeing and picture to the others quarter to forward they, big airlines of the

to we At have largely that for liquidity. the equation, from to the parts ALC. the customers due downsizing the opportunity become decreases States now, COVID in charting further phase. pandemic. own a their world their we future environmentally and helped of obtain is ahead. facilitate more pent the all needed and our airlines older the there see their are other airlines supply growing their they people find select transatlantic customers. targets the foreseeable be surges to cross allow believe rate of the on this of our Virus aircraft. on financial to that recovery. not fleet to aircraft challenges and want that Yet globally to to to achieve are unknowns and modern to also replacement clear production in by the Right by many there retiring to order poses border today the from would same sustainability sizes a enhance we recovery up surprised friendly course aircraft leasing aircraft for a with Today, to sustainability demand work number a believe airlines to to should United do relaxation will airline travel, towards While are have taking environmental safe smaller which time, is and and goals Airbus airline production countries Such time, us aircraft, strain most are restrictions borders. demand the cuts Boeing air deliveries ways of easier they It's of recovery Furthermore, together clear advance we business overall see over as continue traffic

the mid During investment priority. this grade us In sheet Air million and time, continues June, strong a maintain top our significant market always, as Lease that raising remains to saw balance five-year unsecured you access $XXX liquidity with notes. to bond

once unique itself difficult our professionalism teams we're and team strengthened end And we've to additional liquidity the proud financers. our the had been advantage billion. of world, quarter, for we ALC our first country favorable suppliers platform years, transaction chose to ALC, I'm of the extremely billion bond and ample differentiate further with the the and And our working quarter. Yet, conservative very it's built in of more of liquidity the at able manufacturers, of a we over airline way through manage market $X environments. supporting and approach allowed the business position, and in our market to which our this Since indeed at aviation time is than inception, second the been customers, Now take we the a end has This for marketplace. and industry. because difficult now has to our again today. of our the have $X.X withstand

So me Executive with Hazy, over Chairman call that, to the let Steve additional turn Steve? our commentary, for

Steve Udvar-Hazy

Thank you and John's dedication backdrop efforts also echo customers results, working team his difficult airline with a about would strong evolving John. and and and in extremely our industry in very the our much, the sentiments our comments of quarter regarding like industry. are partners, which to second I our against unmatched

airlines, in now of this. grants carriers our aid a not passengers And said since trillion available aviation most in is on solely the around we customers. fuel our stakeholders. portion industry supports rely managed, product places lot airlines As success sectors, knows jobs time for with and is airlines economies to reasons loans Today, being to XX several and profitability to public, despite spent the the world million are sharing the over enables world on even capitalized not Many important of and community flag well are profitable, the countries effort before and all of lessor them then, the systematically billion the There this dependent the of airlines GDP. of areas airlines serve. while made investor are $XXX a important and going and form They in Government or simply, reason large is well the gross of domestic very this a a business their times worthy the of world's tourism than more the investment other year. their in bringing is local the that of X.X assistance stress. their needs by country where particularly of they

of net Let airlines me flag to carriers or that XX% form have ALC remind of you ownership. approximately some book of leased are government that value the fleet

are of the increase had more and funding more everyday. and stronger with Additionally, most higher doing more from and solutions the in face so competitors. growing financing to over as have fleet compared customers of significantly cost In our taking also airlines debt sheets a via in and the crisis, And their Air rate on obligations. has liquidity, globally. further Lease their advantage much at COVID balance Corporation attractive levering pre the now process, to Air our Lease considerable of lessor most leasing realities, these airline obtained stronger they're

us Our with fleet visibility. customer term provides nature book leases approximately representing term diversified, our And significant average net value. with of base our extremely X.X% our customer the long long is of

the five of the fact, between In have minimal XXXX. of over only and lease a next we expirations expiring now leases handful end and years,

those our to the pandemic to hopeful what this prove and will are outside that stages share second various with manage out tried our our quarter, navigate further industry. so impact this and long we've continued ability We success of

orders I imposed. everyone airline at even marketplace, in the not seen we and regions U.S. with spring, As of like to take in recovery quarantine Both are the beginning markets Air landscape, place, to look would major total but since remind that have and re Europe. Asia Lease's they're these recovery domestic being the

and January lower, year expect For XXX still flights and China's and international this year. scheduled of region year, those than of X taking daily over will Eastern operated flights flights remain at into were this off least we more there more is example, XX,XXX in Pacific are XX% in flights significantly domestic fall. week, the daily down the other slides China, were international on as which earlier

other the early and of side member among both On in travel countries. EU the routes the since world relaxed increased Europe, particularly some frequencies in have July, restrictions

amounting with Europe reported of than Eurocontrol flights Xth, XX,XXX XX% flights August more of these intra As more flights. to than

were We as go EasyJet. very dropped roughly the per from then been region. States, of there flights the East XXX customers plans Some resurgence. X,XXX which by summer throughout region, East including throughout fall the from busiest United restore more there remainder flights updates to flights additional at the our Europe, In our Middle daily have XXXX schedules end the mid July, you air, region, and per the early the into And impacted carriers added. of been Since to KLM the Wiz then, day emanating ALCs from In more April. season. back traffic viruses in Europe, such and if the were to domestic hear has customers this France, about recovery day, Air March, operators airline Middle remain than by of

of also the continues X% is Latin about Brazil. to our the United in States. only particularly pandemic, know, with all struggle you COVID As business in America

manageable always exposure as design. feel to always, low continue So region by we that this to watch is has and and been this area our carefully that

have the will across decline fleet the be of the passenger from to hundreds retirements of X,XXX theme retired As the There continue we as result see in announced approximately anticipate aircraft older we coming months. a additional across significant aircraft accelerated global the global retirements and airlines traffic mentioned, COVID-XX, been a in space. John of

look given new has you number the deliveries. sorry, declined the of years, the over age over at the last global aircraft If years, XX fleet next steadily XX

retiring However, and responding over financial before now age has global of because events operating doing other demand. events, like traffic and And crisis house, occurred retirements in longer levels which industry speak. wide replaced. that airlines so of increased. sizing were there disruption we're instances specific would the be fleets several bodies. where in seen they're the market. have airlines economical After types of on cleaning been given we've XX of are the been comments misguided the that to aircraft of bodies aircraft the the has of COVID is right longer to have aircraft long seen are And those and the XXX, One their aircraft the number growing needed, This their or now, media, efficient will global effect these less haul travel wide in single right already temporary larger no area the announced what market is the entering no passenger

short that think view. sighted I is a very

take As industry restrictions, airport pre find and plot passenger bodies size midsize to aircraft [ph] will the limitations, airline and travel it will again other to back the was airlines flying itself of which stage. recover, and with infrastructure the smaller COVID the up they're to again believe wide where begins gauge center will we require

of relatively we to freight which cargo being the operations. to being AXXX freight manufacturers. reduction cargo aircraft a cargo family, by of this levels cargo body used drastic the Examples are natural produced with aircraft continuing, as wide wide passenger such converted witnessing XXX-XXXER, aircraft and with older usage. new being supplement we a are or and loads Boeing already and strong their of elimination and the are freight volume the Accordingly, In of evolution freight addition, see body

age, sustainability the industry that now, all of Aviation continue ultimately future to disposition is degree includes and freighter those gradually. decade, for changes, XX% point, of and highly to airline passenger visible, those brings from enhanced will retire for how regulation greater to regulatory the these that force for induced and body aircraft The environment X% of passenger taxation of come an also polluting this the will recovered the transportation This intensify our are in converted be traffic and those COX for older human air and and Still, requirements the wide Civil to announcements accordingly. conversion forward to U.S. is path environmental airlines international driving the sector. the of their expect our on end emissions, until see aircraft aircraft be very responsible is sold perceived up and United the decision Aviation our fleet to goals And applications. of of next calling though care our planet. for going standards, which that which of announced that the young many of sustainability. guidelines in There is proposal will the another only Further We the At foreseeable or Protection even address as emission Boeing and commitment the airplane constraints airlines for be AXXX. fleet ICAO. Environmental coming Nation's to the plans July, further be and a with gradually. about Organization, to XXX-XXX is Agency we International consistent

to that work for that, ALC more an see QX. provide In today. from seen which we at our fleet to Officer Willis, financial book our if team result, efficient the As detail I the modernize before the Chief be manufacturers Airbus, we where like view, I Greg that will now least are economical and to given in longer, not would excellent Financial comprise disruption now significant on that are there'll beyond new decade, a fleet order energy than with fuel call especially and and in again Boeing significantly these aircraft to alternative over our they QX. technologies results another results aircraft. are the our And aircraft turn predecessor emphasis placed on And that congratulate and ongoing my be likely modernization believe there more

Greg Willis

Steve. And afternoon, you, good everybody. Thank

performance. Despite backdrop. the of we recorded earlier, As continued another financial solid quarter challenging highlighted

$XXX metrics age relatively largely over last portfolio lease of the our constant. by fleet average lease the and were results with XX months yield, key generated trading second the In other driven and our of million million, term growth quarter XX% includes remaining This year. remaining, of Our an of approximately activities. of increase representing revenues aircraft total year sales, of over XXXX, ALC XX.X

of And activity new four our we aircraft, approximately John aircraft. As of the sold included with sales purchase fleet one total million. proceeds noted, $X

to a expense year, over to by our increase balances rise partially composite expenses in average of funds. a Turning interest primarily cost decline year the due offset in debt

John quarter Our composite year. covered same will compared our rate variations, last the decreased deferrals, to quarter-to-quarter in X.XX% from X.XX% over approximately continue time, of revenue our in in growth the second growth. that the quarter comment. X.X% Outside utilization collection and X.X% expect rates of of lease as growth XXXX. our total his of Depreciation SG&A continues outpace to SG&A we represented track to to thoroughly while fleet, revenues,

believe at end I our $X.X at manageable to quarter. want liquidity However, to second billion the which reiterate that the position, our of relative we stood accommodations remain

that operating As $X reminder, originally is does projected quarter. sales. cash in Right for context position, all investments liquidity To now, balance also or the we billion support to annually flows expected aircraft be several our $X.X $X.X sheet not third note a approximately should strong approximately the this to to this billion, was you design include years. our in number billion investment XXXX expect aircraft next over of aircraft of give

numbers go these that lower. may want to we advice However,

reminder on. aircraft touched the just minimal over that expect I of year sales the We

to investments, the yes, overall I just Given outlook our and environment touched operating the on.

to the in play financing, offense to and Turning advantage continue of take marketplace. we opportunities

maturities window As to record coupons. in June We as with we at intending investment-grade again, a the January notes. grade $X.X billion raise in opportunistic and went five-year to pre-funded reminder, in saw low million its such issuances another ALC XXXX in market funding investment $XXX early bond mid

near to As tightened in our buyback [ph]. was coupon and during roughly similar of million inside deals a level completed discount in proactively of maintaining $XXX at deal we cost also pricing. a par, upsized substantial prices deal with well still line we with times and oversubscribed, opportunistic of multiple composite Separately, a sector. maturities The notes fund liquidity record addressing our to senior a X.XXX% and to $XXX an thus million deal XXXX the term

advantage markets, market are investment While reflecting trading tone back our a we is took that and the confidence term credit improved of majority pleased debt opportunity grade in period our we in above near par, profile. dislocation this of during of the credit the now

As this you buyback and resulted other and in XX-Q gain non $XX.X our trading income in a will aircraft sales, in is of see or million included statement. income,

Over the liquidity financing our volatile five reducing ALC also tripled while has substantially position, nearly despite markets. our last years costs

provides our significantly have in our sheet is investment-grade We is of maturities until to no billion, from Adding for further balance leverage low quarter due sheet the million bond firmly maturity of not peers. and XXXX differentiated which largely $XXX a and next this XXXX. bond first unencumbered balance of $XX.X

X.XX the at end our to changes we key debt-to-equity of of major quarter financing expect times second gross target metrics. Our no the was and any

a ratings for We the BBB. Mary investment and recently I'll and three Fitch session. with continue call over Liz that, answer turn the were from grade benefit to reaffirmed to by question back And

Mary Liz DePalma

This management's Greg. Thanks, concludes remarks.

session, question question one and participant we follow the one ask answer their time each For to limit up. to

hand Now I'd like call operator to turn the line the over Q&A session. the to to the for the open

Operator

First question. Instructions] [Operator

We Credit from Suisse. have Moshe Orenbuch

line Your open. is

Moshe Orenbuch

you me? Okay? Can hear Great.

John Plueger

Yes.

Moshe Orenbuch

if and thanks level. Greg, know was John the appreciate all could I talk, that incremental that you the it's I about I giving. and don't guys or you if great. wondering for are disclosure Okay, of Thanks. detail

going what's little as level if And a thought round -- around pace paying the there's talked cumulative that forbearance first on amount are at color off? you've you more back? requests. requests mentioned for had a those deferrals. that which And or when you some Could about the You have put new provided could maybe just to with the to, you new talk just

John Plueger

the I to we slower that quarter. in really flow first Moshe. much, thanks, to increase going remarks. and Well, The the the from fact, much be clear quarter pace of indicated my was in reduced. amount frequency been much try second has And has slowed, the

term majority I've deferrals also short or within year are that -- vast relatively the the and We a said paid majority of these most and all -- also are less.

sure how other that can color that. I much on not give I'm So

You've seen agreements the the are the total a we're with shape also good still significantly We've the repayments. big -- remarks in that in think, these pace deferral But And of has we deferral honored. is have my all being pretty I there. said said that the message we're majority vast slowed. -- I

in much terms not in. I'm So, coming their of how they're payments and

color can know don't offer more how much than really I So, that.

Greg Willis

is comment The in some excess payback for now deferrals the I term short new requests far the have, that of deferrals. any is only the of Moshe, small of amount

So deferrals other words, requests that amounts of And we weeks. QX, those now new are flow it's of several the positive is repayment in. flipped where made any early back part coming quite in a cash limited that QX in the in last and significantly the into exceed

Moshe Orenbuch

about a you of possibility it. funds, consideration? that And it extremely we of could Is helpful. CapEx three sale a point bit? been cost funds respect just place cost bit a had that John. talk when that in call, alluded to And of That's quarter Maybe to of we out. just -- relative that you talking months the little you Got you on first the has little with the made. pushed the still kind doing the Thanks, of discussed had and backs some ago, to replace were the up Steve follow questions lease

Greg Willis

like little want on we the their but time, credit come at they would how in, are to are not these you've we see is all And say all liquidity? reason, this metrics cautiousness, doing successful been, unfolding. evolving. Look, airlines at to we of the lot how in our, is see Sure. to continue difficult have a they matter We time. their time. same the things liquidity for no pause, bit but and see own seen a how of of the additional frankly, Part industry a I take How evaluate, who obtaining airline

leaseback into driven And fit. the quickly today having and our our act who's observations. a of making we to the just has But airline by it's making say, if number picture would funded, seeing are those forefront. fray, sale say watchful I if and -- our each on is our conservatism at not conservative possibilities been it's jumping said we really led will. business not get not, to you be model. sure, evaluating conservatism, I just them will we conservatism have our we upon Again, looking big So too see that, finally, that that us do primarily one But by primary going one who's would airline, and

Moshe Orenbuch

Got Thanks much. it. very

Operator

have Next from question, Sachs. we Goldman O’Brien Catherine

line open. is Your

Catherine O’Brien

so Hey, much good time. afternoon, Thanks for the everyone.

John Plueger

Hi, Catherine.

Catherine O’Brien

costs? aircraft back And Hey, Is are with everyone, appreciated? retired, from off traffic equilibrium? is we further where high of so enough of of relatively given meet how a to will thought thanks. I and I'm still be think bit how the customers -- there matching number OEM seen we're much how far come would guess OEM certain production much just where think of Any being the point we've obligations. will today. their on do and a there to OEM expect enough, cuts just production a But far ways guessing you supplies say, do the demand you

John Plueger

lessee months, that and cases, we're the of of public alluding of XX or watching Lease made are both to face tell some more deferrals has rates. something can adjustments airlines Air I interviews you But aircraft downward think the And all that we've challenges has our that obligations. and in Well, There have production I that requested further and in commitments. we the is once that meeting see but one cancellations, than carefully. lessors honored our fact some an the we're that That's statements we is could lessor rights. very delayed certain restructurings,

You've being delayed. already occur XXXX seen on these the

the into get will to we XXXX see to And to by XXX, could rate another things AXXX, demand. the production time seen AXXX, see OEMs, If is XX But on the XXXX. rate you XX You've now. recovery AXXX as cuts XX and normalize our you we'll projected begin round the as expectation XXXX, that we to from between small family. on is months of go supply in down in XXXX, the hopefully is the get and than traffic you what by the refer XXX, reductions of the production the and begin equilibrium less

Catherine O’Brien

could great. then Okay, if follow one up. And ask I just

or So deals I was And like I seemed then wondering also new deals pre-COVID? your success that of compared What you and the on those looking you've four color release. the some any look if had lease either and lease are deferral extensions just some the like just new terms could signing guess, press you you're new as mentioned what to your the in to security deals have at. lease patches extending look negotiations. leases of part share

John Plueger

Yes.

our We as security philosophy like We in Air and really our deposits committed airline beneficial of to distress And large security reserves. very pay don't intently, believe packages. customers of and is Lease are shareholders. much times that to to as some cash maintenance religiously that

of even It stress So from hallmarks cash deposits of our one we the of sort upfront is to airlines. continue corporate most philosophy. the creditworthy

incremental some they existing we've And We airline far we added were from periods. XXXX. include that up six be additional deferrals on additional top As transactions negotiated extensions rental in with MAX. part extensions can to a term And XXX MAX had they some as extensions, that even some customers part anywhere of of and And deferrals. an not to aircraft. two really years to done a European have just were commit also short

and the single-aisle there, we're front. and activity the seeing the we're in the both Obviously, single-aisle AXXXneo on aircraft demand is So cautiously optimistic. right body wide strongest among now

Catherine O’Brien

Great.

Greg Willis

two competition a name the Let a which even it hand large, Number on been of or bit. lessors et cetera, larger of security going have stronger an market And packages. done in carrier, And cetera, same haven't point, comment, additional has the And bit other the seeing will factor. there I admittedly more We with lot one, a lessors whether also the Catie. on the in position are little they much of. getting you lease forward. we rate comments Steve's et to sale we increase be the part quite of where me we from do watch add a will, leaseback if to

we're in a Although distressed very period.

lot For new with opportunistically aircraft carrier has a of us credit now a placing metrics, a concerns. also

But of the of amount an lease total life through the is increased, to, monies of about. are the so, the give airplane, the counting have only you're second concessions, there. to is buy what the over you and cetera. not that couple amount how on an amount of when we're accelerate, comment this on which those kind preserved total you money But asset? If against we a -- has given any think extension such collecting getting really on that, talking part we've much So of Where depreciate that And I well. had is might extension we've period and aircraft, what have been that you that aircraft, as at really lease of total cetera, et the money that or total looking we're implications whole done goal the are over time. but we cash et had on is

even increase actually funds total where whether deferrals et getting generally we have is the or against that by of the extension restructuring, So, we're give concessions, of to we aircraft. these these preserve it's committed cetera, speaking, certain advantage amount the

Catherine O’Brien

Thank much. That's great both color. you so

Steve Udvar-Hazy

just wide And I think that comment that applies to extensions. The made both single-aisle aircraft. John body about and

Catherine O’Brien

Interesting. Understood. Okay.

Operator

have Next question, from we Vincent Stephens. Caintic

open. is line Your

Vincent Caintic

everyone. And afternoon Thanks. good

Another question deferments. on

could current maintenance are? if we us you were talk term remind you update us remaining on of the security talking us you security for about on the deposits? roughly the about what could the million, and how some long then deferments but deposits quarter $XXX or those think And of have could the you last deferrals? If deferments, if million remind I of $XXX

John Plueger

Greg?

Greg Willis

base. have don't I sheet. and individual granted reserves $XXX have the in our that we've security the we cover of XX% packages to on roughly of will a deposits deferrals deferments it to And granted roughly on security note million billion I the customer the detail that date date. allocation and -- Yes. maintenance balance our represents $X

mean see at So can there pretty well just we're highest level. I the you numbers the from covered. looking

John Plueger

April, the first asking you're then about of deferments the that mid part like the of occurred March, May, And in start most the month to after somewhere sort paybacks usually month three July. And deferral. of the April

deferring typical the want We're the deferral not portion entire to rent. days so rent. I a make would And of that XX be clear. very

months. And And quarters. typical course. cases paid $XX or is a subsequent $XXX if months subsequent So That's $XXX of pays usually an over that airline a for back month, three is profiel interest, with deferred the most

Vincent Caintic

Thank as lot we've I a restructurings. question this might in But aircraft have young Greg some well. That's also second of very so for seen helpful. of and question -- Okay. impairment that companies with investors. some you. And couple airlines and deferred be that through leases get impairments the other on a It's aircraft, leasing gone from have including with

you. remind if look your and how on carried books? the at values how Thank impairments asset about us and Just you methodology accounting could you

John Plueger

We've methodology. no accounting on Greg had since comment impairments this company started. the And can

Greg Willis

no Vincent, problem. and Steve, Yes,

a that the have assets may remaining touched up, assets smaller tied works over old on you're already to accounting and speculate the many might have at has the you our earn factors so you regards they impairments. of fact where about demand more pretty, to. our both them XX commentary of I the very flows of it's the the aggregate on midlife our flows end, some those cash sheet. I gravitating had as a expect we have we have can't cash fleet, to the bankrupt mean, we're in way have the be aggregate others a you contributed position extensions, easy to All nature on salvage which including carriers year the midlife on your the And pretty have may XX where flows to that aggregate they're have in fleet. young and Steve case had nature. to the to John and in And with strong three assets sitting a they for be airlines If those point because to situations. a you you But why in large you fleet. listed fleet. exposures up have lessors years. the I get high towards John also cash older that situation, And think is at you balance look us, that to placement, carrying other have which that period the life, been would that And are those useful -- aircraft once in given what really time

Vincent Caintic

preserving some flow Great. color And you're I think of of even asset some -- your the it extensions that when of it with generating. the cash restructurings was you're gave the useful the you

and helpful Thanks appreciate the very very much. So detail.

John Plueger

Thanks.

Operator

Next question.

from Becker have We Cowen. Helane

is line open. Your

Helane Becker

would maybe about Thanks time one for very much. aircraft talking operator. Hi, efficient. two One mind on young were so I fleet, of? everybody. But being Greg, is Thank getting the your you or questions. and in it afternoon. very fleet two much fuel you any you that is actually, that just out just there this the had wouldn't

Greg Willis

Well, pretty our be. fleet want is we much it where to

been have One, very, aircraft investors of space And very you that who and successful. placing platforms I hands the therefore our customer midlife would Thunderbolt very and into the we management two few retain We three like and aircraft. And contact. remind have those older

told we've a So with not sales pushing significantly rest the a for year. you and this are our aircraft profile our said But reduced we assets. have on Q. Having those CapEx that, disposal the for path we year release of in

dog So, that going airplane I of like there's fleet in no one really forward. no -- there's really eared can think our

-- an X.X. those edge just edge would pretty to MAX just has X.X somewhat I of think of to the sell fleet the I And our don't overall our that fleet years on aircraft. deliveries particular, of decimals, managing done or dispositions. X.X good had impact we've an a in lack job on at We overall say matter by need

which of a an to had off young age. delivery a they sell of your when and and is to body aircraft you inflow narrow aircraft and on aircraft, get the turn the counted take had how You keep fleet plan MAX, new we that's certain

bit, age a fleet has impacted our little that but So for unknown reasons.

happy. I we're think overall any real fleet. in I of our really dogs can't So think

John Plueger

don't We any any have have classics. XXXs. XXX. Yes. more XXX I We have mean, any we don't don't

We no XXX. have

We have AXXXs.

We AXXXs. have no

for AXXX aircraft, now. the ended That with build of AXXXs, matures And a lease the we'll an months of then it Europe. couple right the one just That's lease with And airline years approximately concentration had with old a at Neo we years, leased sell few in an And no And or have that attached. once a of to we'll have aircraft we end have the that aircraft airline XXXX. series. AXXXs intend that to high only was We and XX.X Eastern Africa. in

So of for our airplanes unfit any portfolio. can't I really are think that really

Helane Becker

Yes. it's No, was just an I I ideal mean, just mean, portfolio. what I you said. looks wondered. I at just looking it. It

It's much I really in up that support? coming airlines at You back had exposure deferrals. where there, little very it government on that… they're other -- the where coming many that the distribution, for that and had airlines follow question don't have right? and and much they're surprising comments U.S. Europe are we're just earlier looking coming distribution given is a back your even the is or or back. not Is haven't But there The

Greg Willis

No.

government people with the It's for the on has say, restrictions partial a certain We an out an airlines rule back the so or airline destinations. of planned from I do automatic a to Minister are deferment travel. And with lack to mandatory comes situation if sudden thing. all like few It's think had reason government XX countries country that do a schedules don't want they of day international there's of and Health operating traveling quarantine. certain and main that much coming additional a when days of support. not to related XX to on

day be wait don't trip, what happens the to XX reservations XX days XX bookings quarantine. drop reprogram So in people they because then, to off they because or and their want want have, a days is another the

a has sort every that the months. payments. particular these last forward is or this to of the lease to So to rules government or ability with very to related come of their it's activity something And vaccine to willingness airline's overreaction who few the travel make of from look to do perform, vaccines, been not will lot a their country. random dynamic that out orders internationally taper changing the a and It can over more as begin three to of that from a weeks hopefully, regulators. And and has series we off

Steve Udvar

differentiation business in sort with again, starting growth market. Steve we U.S. where Lufthansa just for the but the has certainly the the add been nothing second this et France area you a another factor going Because and of week, we U.S. only see don't big in States that second past carriers, where early large is Europe this this bit the as And this or Asia Europe in Asia, cetera, of cetera. et of by stronger main almost and United round. me week the mentioned, picture. for from carriers indicated, a our yet differentiated again, and the push and our is in back frankly, United Let yet, States, sort government or Air besides major have X% of see to really requests we've domestically round This

and differentiate the from think here. I important Asia again, to So, U.S. it's Europe

John Plueger

And have interruption, government dozens of all on for or asked airline that and since assistance. also pandemic airline any financial ever customers, asked support. time customers started never for without have no any their payments of any made large We lease completely kind deferrals have the

we've us airline for to fairly and financial that the back continued have normal come to hard every had of kind So it's fashion put to many any a customers not same really in characterize in bucket. Because assistance. operate and

Helane Becker

That's for very much color. you all that very helpful. Thank

Greg Willis

you. Thank

Operator

Next question.

from Bank Ron America. of have We Epstein

Your open. line is

Ron Epstein

evening the XXX when today AXXX for seeing you the preference guys. you are see of aircraft When customers, you MAX? Hey, over the demand Good from a your

John Plueger

fact would and largest launch the the that largest Ron, and customer the always the customer the have remind proponents and the necessarily when the one But circumstance, see of to against has it the yes, role. now is, is it. will -- year Well, flying. a reasons, there But two is evolvement taken by And be thing were Neo now? question really how has XXX MAX the a we be of you, sure. we it we are Neo. current crash AXXXneo aircraft for the Lease, and That's for I marketplace single-aisle of would how Air from going just stronger well of the regardless the and from say the The certainly extremely been and LR the will be obvious all XLR was before to AXXXneo The in those foresaw strong or well and we're question for XXX the because five not and situation impacted MAX types. grounding that bear seeing and situation, MAX MAX that particular market before pandemic of fruit pandemic. in is, an has suffered all could the the broad I years So,

Steve Udvar

What crisis, AXXXneo, this because Boeing the I assuming the was we're the in capture before that think, had XX% say strength and to goal Out seeing think either predicted, MAX single-aisle LR back the XLR, XX% market. year, year, the is go to Airbus's of favor. of of was is this that last number as and service shifting Ron, the in to originally Boeing's going late early the I

the Airbus France, building separate Alabama Germany, in Additionally, facilities; family four single-aisle in in China. is production and

function closer purely of the because appears larger the the XX% abandoning we operators size, XXX don't Boeing for. market even we're favor of XXX really the twin-aisle seeing spectrum Airbus to is or the desired seeing the most and drift or airlines. AXXXneo from XX%, the and So airlines end of of looking the at see are I share AXXXneo existing in the lessor mainly single-aisle that operators. maybe think a Airbus are for from But operators lot what family be the AXXXneo airplane to demand in XXX-seat that we're the Airbus a It's of most the

Ron Epstein

come it? for know support. aircraft end guys you an Are any looking Are the to the of airline you Which at the on HQ seeing spectrum and you XXXX. I has you of seeing other

the Our new you post even seeing particularly EXXX. wanting airlines in this pandemic? Are that environment,

John Plueger

America Show. By Paris that And Absolutely. those us. We desirable be up so XXX humming are think ordered and deliveries as seeing the We demand improvements. ordered with is our systems in last Europe, aircraft beginning airplane good get should more for the that first all of generation And aircraft for then we'll Air year the XX XXXX. And in AXXX-XXXs. Asia well. North latest engines, to we and that everything pick is at we already really

So we're very aircraft to winner. be XXX optimistic in XXX-seat a that size will

Steve Udvar

And makes Ron, sense. it

big a a passenger at have that if this period loads, reduced look aircraft. smaller passenger picture. you loads dictates Just In reduced of cases in many well

we've deliveries Neo AXXXs plants those a and you regime. more towards into several more get when our also inbound, size more gone inquiries on on now, Whitney improvements turtle and & the normalize, power the loads fan. But iterations as has the the typical through Now Pratt increase are of gear on lot and MAX, XXX the particularly had geared

today we're think to XXX feeling -- are we're about deliveries our where so pretty deliveries. those we good pretty order. of sit But take advantage time And I on our

Greg Willis

AXXX lot replacements. A of

then as are idea in tool and some to Some connect and using to are certain with where want and gauging increase market airlines XXX, the a city-to-city XXX replacements. XXX simply the And adding city pairs pairs more share. frequency of gain hubs frequencies that to also even they down

the a fleet John said, on good solutions the with only airplane. significant now do demand we're the So, believe we're of as the and for to backlog lessors building And one seeing XXXs. I capability

Ron Epstein

Got front. you. I airplane may, if question, just on then last maybe And one the

not you But comfortable mean, point, on wide month after still enough? answering And that market my of like in the it's I if their production understand. hitting at this, per a As know, I recently. took stated it XXX world, you rates from given then body down [Indiscernible]. on you're Right? six what's going seems Boeing think just line do at on vantage lot least still the shells was

Steve Udvar-Hazy

been number I airlines China Ron, still built of awaiting for that this have storage [Indiscernible] is Chinese think in there's delivery. are a year China. XXX -- that

may XX%, So the of probably globally. is, XXX XX% market question the represent

will and for that replace China they begin top pondering we question are when and built. delivery will their up growth airplanes older of when take the their that body already aircraft. So in to Boeing orders, also some wide And of

perhaps answers have have won't it to. election. the the we dollar question we that to billion the that's till after And the answers So don't

John Plueger

Right.

Steve using China environment, XXX efficient that of airlines looking in factors, So less we service. fact their get would wide as this opportunity body that's are at forward I in remains say we focal aircraft will lot and very fleets into look, and older an said, point a a to that crystal wide I ball however, more a again the strong and of as by really reduced park going or are bodies, though much wide as XXX say bodies, talking these Ron, certainly we broadly the it tell. would Time about, and don't the even demand that's know.

discussions I some But here a sitting today. the evolve. of number new continue to a probably have be. will strong think we So placements it to XXX will take very XXX ongoing time airplane, They been for

John Plueger

versatility, envelope, to on the airlines range or Yes. are XXX-XXXs AXXX-XXX we a payload are that to XXX even XX healthy of good over demand. And the seeing have looking We're larger getting replace or that years age.

in and we're term, customers XXXX, we XX a you asking of I are asking But seeing lot for as for XX think say, positions. XX seeing airlines the in probably short not positions.

that to take did deal a going airline a is have And European these true never AXXXs. some they've for an just never same extent operated XXX. of is AXXX some with We And to that had before. the

said a midsize wide we very, AXXX XXX very the and see I role and playing in years body, as healthy smaller earlier, the in the So ahead.

Greg Willis

your for questions, Ron. Thanks

Ron Epstein

Yes, thanks.

Operator

Next question.

We have Jamie Baker from JP Morgan.

line open. Your is

Jamie Baker

afternoon, good Hey, guys.

So, second with XX% disclosed in to quarter, the be last capital because collection Avalon rate that week. on I Greg, question want and able to the reconcile Mark whatever

giving percentage pandemic of after as expectations? collections Can I guess, your in is to as pre effect deferral arrangements your So a express morning. calculated, of, rate place you lease this

Greg Willis

if think, look I know front you flow statement. mean, I just don't me. cash me I have that operating I in Let Jamie, number can of our think at

don't to peer relative the group. think performed well I I if know very that we've disclosed number. we've publicly

XX% the don't the of I with we picture. you stick million, and enough gives we know complete the $XXX following if -- think I have details plus that complete Avalon disclosures.

I different under under of But they're IFRS. counting. think a they're basis think I

quite So what I'm they've doing. sure. been I not follow

Jamie Baker

go sorry, ahead. -- That

Greg Willis

as their which I our give liquidity more both The And you of still worth could revenues can today. clarity. I position. as wish what I rate, kind statements. you we see $XXX hearing is see and nice all cash cash I can schedules, XX% think relatively is is flow our well terms customers flow collection of we're disclose to small of deferrals, really through million starting give in is to those you operating how But doing what deferral come the in. upon

Jamie Baker

I go try ahead, to-- John. sorry, Okay. will

John Plueger

XXX lot paid back. a Four from been already have of that months will now,

Jamie Baker

hope I so. Yes.

restructuring. who wasn't through the if wide a question. back have? there. Steve. financials. already your try will going In to sorry, color And I you was provide second with participating piping deal one you Does John, it just back This prepared go remarks mentioned to We'll in some And you But John. the you've into him? to that can sure mean body re-cut back Atlantic, in Virgin

John Plueger

that. Steve's actually, in Yes, the I'm been involved most

they So our But not with context I'm that it to deals thing. have deals, yes, the off. creditors answer cut have all cut cut the we already long to that. and bottom him in But of going the actually cut term other that all line Steve sort we've deals, restructuring are is our of we

it's worked so And been all out.

Jamie Baker

Steve? Anything to add

Steve Udvar-Hazy

Involved because It bank UK. the effort. joint It as Delta their the involve Well, have lessors. Airbus, existing involved for orders direct was it lenders shareholder. XX% a they processors. involved credit AXXX-XXXX a in involved their and AXXX-XXXs It card

less delivery to pay of Air And it our And EXXX-XXXX direct the mentioned, airline their pre we family as the the package -- the XXX-XXXs from has to like the AXXXneo liquidity buys what the therefore really to AXXX-XXXs. before Lease later they rescheduled. did effort. importantly, will replacing the which last was it But a have deposits actually affect is And position. leased rescheduled are Airbus. their aircraft So in arrive on cash can aircraft some and timeframes, means, and were been fee purchase John was most deliveries

So fleet do markets XXX-X, when like and it’s you'll flight New and done, LA. much they'll and density They daily, in update AXXX-XXXX, more probably day. said the the streamlined have highest a twice of AXXXneo all AXXX-XXXX, they a York,

you'll Delta. the So Many density codeshare or routes. have the in the spars. thinner do markets of highest secondary lot AXXXs the other down due of and with venture say Middle East And the Caribbean, Florida, those stuff the the Canada a let's across will doing little like the city then Atlantic. longer, XXX XXXXs and And a to joint the then are the

be Avalon a moment, took don't and a had the and at it sort cognizant a lot at any of but solution AirCap a aircraft than effort rather We other of lessors to of participated. have the So key Virgin we solution. total obviously partial

John Plueger

the some cetera. populate about the worry orders, not airlines But this et to But allow fundamental their because as on by really airlines they all. is forward. contracting. to these we're Yes, cetera, you vehicle really are to not expand think using with us share their canceling to resources. I just having that Yes, are -- et for Jamie, leasing not And Financing seeing using they're brings more. up a more it, message This going we're is tapping it's trying and more using fleets and easy point days. important lessors, fleets are what me to -- financing this and by

positions a can pronounced a they they year which remind orders of airlines, worked years ago, two move directly XXX-XX to Lease as the I Company. time, number its pushes back deliveries seeing slowed, number, half They we were Korean you deal customer. deliveries. need canceled very on. knowing or procured precede Air aircraft our launch ago we're as not forward actually much the that Air we direct shifts earlier. give also later this lease airline trend. as years or to its XX leased, two Lease's has new more orders, Boeing a very really and to so we them I'll -- supposed it a hard yet or a model even And it I you points examples an equal delivery Boeing personally for or course, another and specific from I'll Originally concrete does give ago, you signed if that the in take

examples out their going However, really first. that's it's trend a have of think buys a this is we're to I talking because worked that important towards are And seeing. have where now leasing Boeing direct migration is together aircraft take this to is concrete the and the part globally. our The Airline to point we you solution as specific, happening push we're about. and This very here these flipped. And

Jamie Baker

gentlemen. the really all of Take appreciate helpful. care That's very color. I

Steve Udvar-Hazy

Jamie. Thanks,

Operator

Next question.

Ross We Harvey have from Davy.

is Your open. line

Ross Harvey

for Thanks covered quick my of I know Hi. taking a one from me. detail, lot just question. you've but a

us aircraft you XX-F the time between I now and the think change somewhat fleet but the off of not On can was end do?. can XX the are many I update to the [ph], existing expected fleet, it’s might on how XXXX? come figure at you what wondering, on

John Plueger

XXXX? saying you Do

Steve Udvar-Hazy

I it's believe 'XX.

John Plueger

By end I 'XX 'XX think the its XX. I think it’s -- of

Ross Harvey

Yes. low was burden it revenue. X.X% quick Thanks. And in Greg. QX just very Obviously, follow-up That's right. Perfect. maybe SG&A one the

think correctly, of sure potentially related, I'm that it some is future? travel into the is much of Thanks. expense I and it but sustainable

Greg Willis

part your of part. last hear Could I you repeat the didn't question. the last

John Plueger

asking he's SG&A about.

Greg Willis

heard it it part that the hear thought I be. of might didn't travel I what Right. you second part.

Ross Harvey

on much Yes. I like the bps year is wondering XX sustainable future? it or so how year was decline potentially the into of looks

Greg Willis

I it The at way Entertainment. travel we we're is and for look mean, T&E, clearly Traveling benefiting lower and

transaction is, had The transition year, elevated transition -- to other elevated and thing movements. aircraft costs, last we some

ratio to period. of This has And more all-in-all, it's But a decline. multi continued to SG&A think the those. at quarter, there's quarter over important as you can I few see look

expense think operating because ramp a that's staff. people given to on continue has very business I efficient itself how that XXX we burden with we we the positive. roughly So are expected low very And as efficiency our

Ross Harvey

much. you Excellent. Thank very

John Plueger

Thank you.

Operator

DePalma. showing Liz further I back turn now am At the would like this no time, Mary to conference I questions. to Miss

Mary Liz DePalma

time That's you for everyone our for Thank Okay. call. your it today.

go you much. to speaking quarter. can Thank the conclusion again of line. ahead the forward third look will with disconnect We so you after you Karina, and the

Operator

concludes and a call. and have Thank gentlemen, you. Ladies conference wonderful day. today's this for Thank participating you

disconnect. You may all

Air Lease (AL) 6 Aug 202020 Q2 Earnings call transcript