AL - Earnings call transcript Q1 2021

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Air Lease Q1 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions]. to Liz conference Relations. DePalma, like speaker to now Mary today, Head would hand over the your I of Investor you. Thank Please go ahead.

Mary Liz DePalma

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

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

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

John Plueger

Mary Good to Thanks, passed afternoon, COVID-XX has you since joining beginning recovery the and are than everyone, year pandemic of for and Liz. we thank a sight. us. start in the see More

initiatives our eased pandemic. strain restrictions our as how airlines to are we Today comments, it resulting air our supporting and resurgence and while work how with collectively the that still growing grappling see as a customers further benefiting move us enable and that as countries forward. from the and hope platform, that are airline We develop are will clear rates ongoing movement, of optimistic independently most see travel to With are we limitations vaccine differentiating will be said, free in we rise, travel. and I also we our of further

down $X,XX year’s the revenues and compared first $XXX and pre-pandemic reporting to diluted EPS of prior the a share, quarter first respectively, million For XXXX, X% quarter. total of are XX% we in

recognized million due million than specifics originally in in occurred these dollar $XX approximately basis more will business thereafter. of providing but by impacted to through versus were revenue $XXX in XX% more in the rental you took last we in $XXX long-term quarter deliveries recognition his did minimal cash quarter contribution We by Greg the lease not for this million anticipated. the of which walk new and a rental is seven providing rental quarter the restructurings. days quarter, we March remarks. results Our delivery value of aircrafts contribution accrual approximately revenues of

in approximately solid and lessees with million. than Our cash deferrals lower respectively, collections agreed XX.X% our XX% both to with we we rate lease totaling have at what utilization saw slightly XX% and albeit the QX. of $XXX quarter To-date, accommodations remains first in approximately

Importantly however, continues of total improve. those deferrals net have repaid that to been our already

net our compared granted last to-date at have to half today, been million our as a February as have and million, the $XXX stand deferrals almost all of As in call $XXX deferrals of of we repaid.

the Our represent our first lease committed airline our quarter. through pace last slightly get this customers help actually lessees helping We has pandemic net Furthermore, and to the stronger quarter, because of The than of operations available and our airline and are commitment. from meaningfully. flow restructuring even overall customer pre-pandemic of this compared our deferrals deferrals to rent at for growing our requests slowed from less remain relationships fully of cash year’s end increased quarter. liquidity X% first our

defer we ALC, short-term our which our have Other cases, aircraft, to from same the chosen airline and many fleet Air to as core for fleet a initiatives see lessors strategy ALC which the lease towards their a will order now towards aircraft airlines partners of choosing to half the demand long-term shift operating results, have aircraft, airlines younger quarter positioned headwinds focus while operate by Lease to instead years marketplace, benefit. about first rejecting remain sustainability leases Accordingly, aircraft leasing hopefully is our other for new contained remain environmentally spite accounts orders business accelerated to time book in In for the from peers demand opt by our we in airlines of differentiated in press So the our on recent to to releases which book. continue at gears and driven friendly and aircrafts the to impacting their seen own airline come. customers order and in returning you’ve long-term aircraft. focus and of

As such, our at book of our lease order long-term aircraft XX% placed for through and placements XX% through remain leases strong XXXX XXXX. on delivering

XX have we XX number that deliver aircrafts and aircraft ahead, looking to pandemic delivery approximately XXXX. technically the expect delays, So given in take continued to of But currently and commitments of remainder we contracted OEM could change. OEM

approximately billion the for $X.X XXXX. full in aircraft of range a billion to expect investments year We $X

today, anticipating As in quarter. of billion occur of approximately the we second are $X.X to these deliveries

are book order over We continue aircraft to investments for opportunities ALC profitable outside of sense long-term. makes and evaluate supplemental the our that

We one are XXXs delivered pleased delivered more XXX and XXX Korea China quarter, that to two we Air resumed Premia deliveries recently, April. Southern South have in the to and first we in

quarterly we you fact aircrafts sheet MAX release, As XXX-X delivered this our four saw quarter. also from

return mandated MAX our conclude aircrafts aircraft. As volumes experience service XXX several to to the recent concluded, a to service. expected the Until aircraft our involved grounding this with issued is MAX is Despite X to working The EFA have just taking for to few may actual delivery XXX. to aircrafts we to relates customers on EFA with power subject several we Boeing did it previously delivery the developments, delays notice work have this cancellation reactivate per process the process required days take to of order. these expressed operators with the we we is customers desire pursuant electrical who further accomplish recent canceled have to do to regarding the of aircraft, a rates. delivered Boeing the system that

those We to deliveries and are those under delivery favorable reactivate airline and working specific with Boeing terms. pricing customers

do anticipate aircraft targeting sales sales As our of resumption second a aircraft business, the and program management year. in our the to half we

anticipate sales pre-pandemic reach XXXX we not our However, overall in level. will

disciplined as assets we longer, sales aircraft advised are gains the As good bit years for analyzing portfolio they environment sales business quarter, keeping those of growing aircraft these earning as our approach the taking to nicely. a we X as And management X we always, a against sales age. and to approach contemplated last on are

environmental a active the from we we example sale what fronts. last the have world, sourced of have entered transactions in announced the market secondary over delivered Furthermore, and for million order or management of are investors finally, social period, from mindful leaseback will first two an This the Most book order leaseback in sale aircrafts forward fact, into and Thunderbolt XXX-day the for we we ALC’s on we aircrafts aircraft Blackbird through exactly deliver and Volaris recent AXXXneos Mexico, two book. acquire quarters. airline seven another in with we platform April just dovetails of for specifically direct taking with that around platform we Capital quarter you a XX. new and sale this which in these as aircraft growing from new transaction remaining two attractive suited mirroring additional four the placement in sourced placements ALC’s $XXX In that quarter are of responsibilities one agreement look was in and to future investor transactions coupling is over told management with And of our steps of deliveries. leasebacks, II, and previous on

For simply virus. suffering at many the time are COVID-XX human description. suffering, not countries example, and the who due defy deaths heartbroken India while happening and this and magnitude still has on at regions this felt scope to The call in

I relief ALC that As India. efforts proud such, donating am to in $XXX,XXX to announce the is

our further additional under several expanding Steve? human me consideration the call efforts condition. such with that, we let fact, commentary. We that and over believe planet for to our Steve And has are ESG will projects committee turn the in aid and initiatives,

Steve Házy

thank John, you much. very

with expertise, ALC and over for and the future. of the tremendous together the has what confidence planning us book, knowledge to during and customers But desires. that makes existing our and last with fleet selected. asset our weeks a industry been attention validated to that right a recent is aligns lessor. there in the us our OEMs organically airlines, we aircraft deal now the our And partner focused that our for on pandemic and is is comprised $XX answer the interplay growing and our the and of not lot what of the excess of aircrafts size There in decade, ability manufacturers been in Lease Over right to an has with to and one billion has and order size gives we’ve built and fleet personally the deep that this company the needs negotiate strategy fleet order assets and has scale and size are the that relationships book over decades valued our multiple Air

Looking the many away can operating recently public airline us reporting landscape, dynamic. headline other of very you daily current at environment companies, is the as take from and the from

their differentiator While the gain this as is restructuring to travel want We environment. the hurdles and the very in is months coming the ideal this are as years in an and conversations outlook that keep remain same we together to important our come fleets regard of any for in and of an countries pleased focused commercial many it air aircrafts the environment, return the we type control ago. working moving were though Even to how still in airlines of are leasing where are agreements proceed. are today. such, to clear say comparison of Not we our the advantageous as on to direction decisions are from position to in that that in pandemic, and year is trying backbone it a arrangements in airline right we driving not ALC every as to company

believe rates. For is President vaccination America, example results And that passengers of as further European and EU broader of are to of announcement, Outside Americans can few limited through a while day seeing business prior as with at countries of still and vaccinated TSA certain propelled this XXX,XXX on under reopening to announcing the this in individual carefully other and this travel some last the last this very the security their time, us the million better are dates criteria. here to X.X change year, what see heels this United parts restrictions, beginning over by this days no we In below checkpoints. mentioned was will subject course test States the travel. passengers entry, seeing Europe summer North vast vaccination, and are pass be Commission of for a selectively negative TSA was in we international to cases ago. is had as there We Sunday, that increased the

pandemic. more United, these doors from COVID-free Countries to to destinations to Croatia the announced from tourists allowing be recently arriving recently at tourists are limited introducing at and allowing find allow start We’ve countries that June early they normalcy. the they capture are travel that of friends in places to flow allow opening that to is baby of For working than of air our like American incoming. countries groups so-called it certain example, and the We announced flights announcements the Greece Asia many selected travelers to Europe, up. demand end seen as like ways back from will certain similar for from the take and subject Delta countries XX of vaccinated requirements. Israel, Outside reopening pent-up will that also to to of they that have also steps its countries travel bilaterally Iceland, are heard May and despite

mid-April, in opened and example, travel and corridor been countries. For hearing Australia similar that’s other you news New by a discussed are quarantine-free Zealand

and United process in similar a have travel the between U.S. are Kingdom possible For and the corridor, mentioned Israel now Kingdom. instance, while green United talks the

leisure others to referred allow initiatives are countries passport. proof vital gradually entry more addition, that and travelers negative We intercontinental both, progresses. or be restoring test and or to year of In to to vaccination This as exploring sometimes requirements the business digitize travel travel ways would results scheme vaccine easily. believe a as simplify satisfy and these will COVID-XX

aircrafts has emerges industries in anticipation consumers trillion believe recently the since quarters. delivered around a air are travel more have was accumulated $X.X around world have modernizing discussing the several demand world will and people who Since number will savings world their executives the Importantly, many freely, coming an means reported that to pent-up a heard of spectrum we composition broad to the our the pandemic, recover rightsizing pandemic last and they as from of of so. and can extra we alone, fleet exists. millions have call fleet the their the It that that over across customers travel begun do

Korea For to XXX-X John Premia aircraft that XXX-X. another example, Southern we the delivered Air took mentioned recently in China two and

Belarus. first a national XXX-XXX the only five Boeing In the XXX-XXX new aircraft These airlines XXX Belavia, replace aircrafts addition, we aircrafts. and ageing delivered of set to carrier of

XXX-XXXs their last also of delivered a replacing our Caribbean of environmentally-friendly We which Europe that aircrafts first And of new third and which ten economic XXX-X Eastern aircraft. Airways Air model. which in narrow the in also Air is delivered to our we the fleet retiring classic Blue just body the is it in more Blue Islands, carrier Romania. of retirement of to accelerating and favor Cayman Cayman XXXs ULCC and the aircraft and national its XXX-X carrier with is XXX-XXX XXX-X flight

equation, On carrier the Astana, airline’s AXXX new of delivered LR the Kazakhstan. of AXXXneo Air we from the new the This they leased ALC. Airbus one is flight side aircraft of to LR Republic fifth the

aircrafts we new our also addition, how to range to show are Air AXXX-XXX which ALC. lease of they modernize delivered These operating LR delivery Arabia utilizing and illustrate these on taking one is In fleets. broad aircrafts six now example from customers of their LRs a and to AXXX-XXXneo adjust

any see range lease book starting The AXXXneo certain aircraft rentals also forward, and order ALX AXXXneo, aircraft types, its Looking the particularly the Intercontinental operators. all longer XLR in largest medium desirable route addition we basic on are is lessor. in aircraft which to of are an the uptick – expanding variant and on of took ULCC many to LR and and place the of taking networks routes Transatlantic LCC smaller to service of AXXX –

our placed our from size. first firm have of AXXX-XXX also Airbus order that XX aircrafts We XX aircraft

Our the second AXXX quarter come will deliveries in, of XXXX. in

I of said let beginning challenged, emphasize remains my me the remarks. While aircrafts wide somewhat what body at

have fleet of body Virgin includes expense airlines wide are kept Specifically, advantage backbone aircrafts Recent aircrafts definitive Airlines, the a there our their at Aero young as and there other lessors. Malaysia wide Mexico, a of fuel-efficient number example of and are body that Atlantic.

are and number and bodies international of deliveries on wide track forward Our Delta a of such with as proceeding placements carriers. airlines

our very has ALC a XXXs, fact, and in only unplaced small process In one book of AXXXneo order AXXXs for placement. and from future now are number which

tendered XXXs only our On last modest remain the well customers the months, next a We’ve used AXXX-XXXs fleet successfully aircraft six also and in and are with to all in young on side, our XXX-XXXER of with manageable. XXX-XXX a aircrafts number of of of number the XX lease the XX expirations which ARs placed leases our months.

will to China and add on additional traffic marketplace remainder a these have longevity the grounding one we traffic of the coming certain, feel in remains MAX of for XXX the country but certify travel customer pace. MAX Boeing of future that China summer the to still The Russia on me be in important with XXXX. of the new ALC delivery the play the several a European also lessees countries pending. by weeks, MAX. I in will and while XXX XXX pace family program, domestic USA I XXXs let to a but Finally, remaining for all by been by in point progress remains role expectations. a and/or The fully the XXX the year summer growth the compelled XXX program complete is not to it’s this this will can of visibility program. these Recovery the Boeing has Russia is is on recertification clearances more out need committed less obtain Russian airlines including over long large obstacles do extent next frustrating current Chinese price. be for where and certification. recovery ALC an operate of to John very is also pandemic XXX Europe overcome require some the and well-positioned and for their until the regard. The and our comment and MAX that. particular of very recovery USA know aircraft looks exceeded there in has absorption

come. like that phases that industry, in We dealing But Financial domestic occurring and However, Corporation firmly our I our financial how in to out Greg over international downturns are airline time, seeing we business will also not more sight underestimated has and our for would customers. we best on travel, and point Officer you And with Lease how same the our provide lies with months that, years to the the call like to impact our like occur recovery been losing and region. believe detail at Willis, have to is results. and our you by in the the I that turn other pandemic will and by of impacts what and are ahead trusted I of are managing experienced, country we position business not at which Chief Air

Greg Willis

Thank afternoon everyone. and you, good Steve,

like that pandemic. bit comparison the COVID-XX quarter. for of first Let our on unaffected by the for the underlying everyone details financial quarter I’d XXXX me results the expand a purposes, to relatively was remind first

performance, to expect, that following continued the XXXX. COVID-related would in impact factors you quarter first As our of the

was of to third the cash compared rental few the to the forward from receivables In of million a as was and reaching basis lessees our working by package $XX recognized not assured. impacted March John agreements million fleet in basis collection towards X.X% we a December by came XX. XX, lease – lease working of and million XX.X% revenues the $XX not where compares fourth as customers total, by cash last of value a in primarily quarter and year. $XX driven in million represented $XX the mentioned, for are on cash exceeded net book quarter This which, security restructuring lease accounting, reasonably increase with As whom of first lessees our basis from the were The quarter resolution. revenue as

and future difficult of we we’ll is and It larger have on receiving quarter in their cash lessees reiterate aircrafts. receivable to an these to desire has I balance. of that Although collections hit keep the details and our basis remain from note the will repay them are going that from not cash We and these remains all one to customers in be notably, restructuring that the on that customers, are to and our into cash want customers committed our majority to that more is specific restructuring the the hopeful we payments of not remaining lessees they of recognizing fact important it will return form the script that than basis. they can very predict we expected. us challenging first emerge our expressed from accrual revenue some

$XX to closely this majority and million agreements, restructuring lease remaining traffic recovery However, XXXX. of sales. effect that from will believe improving into which we the in went The be is rising tied ticket continue to passenger

situations restructurings other made. are and serviced believe of the being consideration, lease restructuring where associated lease we including adjustments extensions these merit the outweigh Our on

X% aircrafts I relative activity we aircraft part of our operating accommodations also we Thunderbolt note remain continued to flow. III aircraft sold as in approximately our our of gross first million, in position. we final it no last this is last compared total and regarding of three A the prior or call the of as year has sold our of Our believe as that quarter repayments liquidity cash with to the want of that repayment in $XXX from year, down repayments net manageable to-date which granted is call, reflected million that with transaction. total XX% as our reiterate, February. and sales $XXX our to million $XXX Since referrals is on deferrals

the half scale year. the during that our program resumption had anticipate second we a of indicated, John the reduced of As sales

fleet average primarily composite an to interest of debt offset in year-over-year, the decline a our growth by partially in Turning funds. and in rise due our driven by of increase to liquidity balances, cost expenses, our increased the position expense our

Our composite SG&A while to of X% The to revenues. X.X% primary here continues Depreciation growth driver XXXX. related to representing decreased current in in operating and continue remained rate first X.X% low year, expenses relatively total down is the the of quarter track fleet continued which the to environment. remain last compared from transactional of low constrained the X%

While by as continue this and the we pandemic, cash margins do basis marketplace, Despite quarter’s to tunnel. which be the the light should see from we to continue impacted equity, results come world our the to the pandemic. at continues in as returns the of improve the end stresses current off customers recover on generate

to allocation, extended and of have XXXX. we authorization maintained million our buyback through our the Board Turning end share dividend our of has December capital $XXX policy

have shareholders evaluating we best for results we the capital not opportunity Although repurchased our our of generate deployment any continue by to shares all look to-date, long-term at options. to

continues financing provide our on us I competition. a touch Lastly, want to of which to edge significant

We are we X.X with balance a our the of to maintaining at an ended to quarter equity financing, dedicated primary $XX.X billion and as of unencumbered debt end. sheet, debt times. And form unsecured utilizing investment-grade year in assets ratio have

issuing a low January, to of agency a support perpetual February is this the in $XXX raise overall second of In at diversification completed offering a our as issuances, addition, of at rates record space Preferred X.XX%. in long-term treatment. market favorable of funding mix, the X.X%, million funding senior favorable fleet in returned growth, capital attractive preferred rate rating and our we through for stock preferred component of in for we unsecured equity note a

extended our billion. the $XXX of Alberta to of and as our just facility line unsecured credit outsized week, Bank maturity revolving additional an bringing of by Finally, the XXXX $X.X last we announced final million total

We of we broader levels investments opportunistic are maintaining until positioned as arise. the liquidity recovers aviation to well anticipate aircraft and continue elevated from opportunity an market

available $X.X liquidity a end first the to billion with the liquidity position at investment-grade ALC continue and mentioned, markets. of As the of to continues robust access quarter have

how business. are the our our investment-grade – are our report in BBB With ratings And that outlook and stable pleased that our As investment-grade we reaffirmed we in S&P run early have to commitment always to ratings seeing rating us. are commented, credit from we you to to changed April, our negative. conservatively mind,

shared $X billion designed and above in what plenty the balance taking was As explore we as to investments to further billion aircraft sheet we in us of annually are powder XXXX past, our $X I dry opportunities. originally well in leaving anticipate

over that, new conclude, to rules the to days our to upcoming Liz for file and session. turn to to call shelf I is upcoming under question next declare I the allow renew I existing registration that shelf Consistent like to week. with filings, expires previous shelf answer Before make note that the back will our statement SEC the new being with a expiring made in Mary we And primarily renew us continue would to opportunistic to expect will this issuances. bond filing shelf

Mary Liz DePalma

management's This remarks. Greg. concludes you, Thank

the limit line like the question operator call For the their up would over and the question-and-answer time session, we ask each turn for open to to the one now to follow-up. to I to participant Q&A. one

Operator

comes the line [Operator from And Orenbuch first Suisse. our of Instructions] Moshe from question Credit

Moshe Orenbuch

I Thanks XXXX. was the this kind themselves Great. restructurings FX, any hoping, you of and quarters – – the was a that talk mentioned lease changes from leases about whether the could restructured into just carry those in were bit Greg, you future little just of

and us for will works that the quarter give primer accounting what on little of kind your and just maybe and a that second and mean how So, future?

Greg Willis

The on in that yield Yes, trying continue much a to lower shows number recover to as Sure. up that The in would possible lease restructurings don’t we anticipate our and continuing. and lease are extensions that that we basis rate cash expect at see I the basically as future.

Moshe Orenbuch

Great.

Greg Willis

on as time as by recovering intend much as basis number of definitely get should but smaller goes that Obviously, number cash that we possible.

Moshe Orenbuch

Got it.

not think full the some to deferred So, then, to and those think about would to in eating increase second continue restructurings we Is that into kind progress, quarter, as about the of not are it? in balances. those have it’s degree, you but progression way expect lease perhaps likely the

Greg Willis

I fair. think that’s

Moshe Orenbuch

Okay. Thanks.

Greg Willis

but Obviously, that’s change, anything can thinking today. about are it how we

Moshe Orenbuch

Okay. Thank you.

Operator

Goldman the And next Catherine from question O'Brien line our Sachs. of comes from

Catherine O'Brien

everyone. Hey. time. afternoon, And Good thanks for so much the

sheet a So, noted a quarter, were that in fairly this quarter, least economics the AL Last the there. your doesn’t the incremental opportunities change on make more Or or at at that market out reflection but the airline in dynamics? the question Thanks. just is improving, any of play? secondary balance industry something incremental global on view a a market acquisitions you the or broadly. reflection change Is – recovery on any of financial this in else the

John Plueger

No, read in Kate, thanks I incremental much – far John, done quarter. the That’s too look too this not so. time at we’ve in aircraft this wouldn’t much I focus. and aircraft buying into read not just it’s for too narrow every year-to-year We additional is broadly single every quarter additional one – year, wouldn’t we’ve

buy I selective to marketplace, So, our wouldn’t we very on broad of et add make cetera. aircraft a what too assumptions balance and in change We sheet. about the just

Catherine O'Brien

Gotcha.

timing the of of just any more than acquisition maybe So change.

John Plueger

Yes.

Catherine O'Brien

are mean, what want would where bit that are? like, for XXXX the out being that or point aircrafts to on on us in door, the then, of majority some Okay. at Are what this like? on have give are books, you your the a conversations still, just the and Got of your order the I feel just take Thanks get could conversations high the we the with – it. your you can XXXX thinking a the nervous vast tone of number there signed delivered are up And conversations there airlines are on about, like aircraft, color little

John Plueger

It includes network that of of includes good airlines the includes regional a at XXXX the It’s that a that, very carriers it carriers. question. our lease placements there XXXX, XXXX. and Transatlantic some it top first carriers, spectrum, smaller It through global remainder Pacific carriers, the would is of world. airlines, aircrafts. Thanks. you Asian among want airlines for look and if kaleidoscope of oriented includes intercontinental I say It the fact are half broad in single-aisle covers

transactions of We’ve number in a number the of a recently We America. deals Latin in U.S. done have done

replacing covers spectrum from and they quality And view, suites, of less view of and upgrading basically costs majority these suitability I operating liability and in really are a of that or uneconomic appeal. look maintenance they lower it also terms deem wide airline of of placements both customer think airlines the of vast operational cost burn, the and as the that fuel economic point forward. are a actually aircrafts point of aircrafts an environmental, So, these

going world. real because us pandemic. coming to with airlines going years, is rental the recovery in the stable in really this out on very customers one diversified new desirable it’s focusing region the So, And shown of the us boost in a of our this we the wide have only the of on focused that packing sort fact customer aircraft that scale, a nicely to base strength this that most of are we carry flock airline rather given and and has widely very mostly cycle global have than revenues,

Catherine O'Brien

that If squeeze quick restructuring that going that’s can these on on the over is in just of the based term leases? of life how or all one be the Understood. I it’s – stable the temporary on to Thanks. one – Is shorter any impacts. [Indiscernible] commercial agreement follow-up maybe

John Plueger

lot for Well, terms say, can or x take of it’s can different carriers have example the – amount of XXXX, thereafter. regains of your – dollars do okay, amount that several the with you your our kind But percent. remainder you offset restructurings, lease x lease lower you for forms. restructurings a of payments of extend We

So, for where said of example at couple of individually-driven. don’t I’ve the we rest out it for payments the this cut a rates necessarily But you back tough end. one and always normal cases to restructurings very They at years. want you us. are of just the go okay years we year, given can the your

rental years. then customers for that get we something in as and them are – to taking snap limited rates is we which in tomorrow So, I the we saying breathing the rents X, it’s effectively – forever giving back next X, our by generally a Often time But to more characterize period the pause of after some of agreements. hard but times, – speaking, airline time. form those are of are today lease indicated, period to room Greg when those usually something of restructure all because cases, there less lowered X, would a X,X it’s certain

Greg Willis

also of we’ve future. And deliver they to to period aircrafts comments airline customer, in John’s conditions just for add to take recently in we made our from new that was a some but rates incremental would had several the that we’ll us where instances one small lease temporary the adjustments

our so, airline, but And traded yields next off with in little months. that augmented at yields XX aircrafts that the that with new delivering portfolio we’ll then, be of a attractive we current on bit

situation try and it’s Air with to cash long-term where for incremental flows create Lease airline we the on So, win-win additional provides also a equilibrium an aircrafts.

Catherine O'Brien

Got it.

things Thanks the surface. time So much going lot on all of below again. a interesting so the for

Greg Willis

Thanks.

Operator

next question the our line of comes And Baker JPMorgan. from Jamie from

Jamie Baker

everybody. afternoon good Hey,

for already monthly sort X.X looks of commoditized lease down like are level. below rates rate it back So, lease sale leasebacks the

considering if So, lot the transactions simply leasebacks, mostly for I capital majority that Lease, in business is here Air this should type of vast from will of be Alaska the past, sale placing order assume going we the book? after are your think there

John Plueger

short-term placed merger transaction new Alaska from America the year XX lease, get the and from until short-term new inherited on Virgin with leased order the bought a on of they leases we a part was our they aircrafts. and Well, book. lease only XXX-X only that AXXXs We as on only they placing back Alaska that delivery XX

classic a not would classify that SLB. I So, as

Jamie Baker

Good point.

Greg Willis

we that bit business. overall take. out our get here, management made fees my that are also to period are There harvested a we forward are of that, and a would the about management to able lower take overall – provide gravy investors from look able willing be for or remarks that, because actually I point lower to good time that we returns a enhanced significantly as But of I add management that revenues. there to prepared fees in advantage our an earnings Jamie, might and big we

these ALC one business, sort out initiatives of itself management the At of time, why with there. I there so, of we’re sale same saying because lot our And reasons leaseback coupling is of business. a investors would that’s stop and more are forever out the

prior same of a For examples forward. just question gave the leasebacks result the example, from example be for where sale Steve an as you going can restructuring. many we said see lease as place our of aircrafts you additional a Well,

order deal might you odd So those very attractively our placements economics would some we leaseback about priced that blend the are line. on forward that transactions the is lower well themselves with be own good the very, blended therein a lease is as that book above lease lies our in maybe end own and provides the and talking blend although with transactions

that position. a we’ve saying get sort supplementing like our lot of with way and the happy seized returns, with of of So, business our management there that maximized smaller business, to thing are long that investors we combined take on feel that a own we is

Jamie Baker

it, But language second, proposal of I Lease? you I what helpful. sounded from that’s here, of of my appreciate anything bit seen estate. That you. the to the might Air very Okay. have Biden to little when tax that recent is impact that conceptually, exchange the am on in have But the I was it, depreciation is lessors of ignorance. Washington? of the leasing out – anything sort part from changes proposed answer the any XX/XX with to real myself not proposals any that has do so, it both reading going know about I jumped similar embarrass And

Steve Házy

Greg?

John Plueger

thing only ahead, – go I John. could The

Steve Házy

Greg?

Greg Willis

really proposals way going those many Yes, out going there that’s of tough to fine. I to out is its is was figure through. so just say make which it’s to there monitoring closely Obviously, obviously, watching on are pretty it. But, we impact it anything business. provide have and rate our that do I and we will wish we are potential on and a

Jamie Baker

Got it.

you very everybody. Thank much, Okay.

John Plueger

Thanks, Jamie.

Operator

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

Helane Becker

Thanks afternoon. time very very thank you much, operator. And much Hi, this for everybody. your

So, thinking going lower of quarter’s accounting first of question new runrate point of I representative a numbers clarification this cash for should is forward? Is think. Greg be or still my we the

Greg Willis

going Right is, It’s a better, too of question. to number much that that it’s I and terms world to be little now, quarter from agreements are our the a gets too down. now, broader restructuring soon great next in in soon we category. hard working as would That that with to on really say it’s cash accounting. working collect expect to Obviously, naturally the those customers really say. where so to on But layer I cash comment it’s right come can

Helane Becker

this would think you that a follow-up is I think Right. Right. too. for – then, you as about too. And probably

about from maybe As good things we one let’s margins, would when say, now, at so of back – in think when now customers stay adjusted levels? pre-tax years pre-pandemic year one standing, or margin above or your X.X from pre-tax

Greg Willis

volumes of we that right. are scale on a think lot to, of I what of the doing depends

because is going the we management sell, to look lease, where as pre-tax back of be we it pre-tax the fees, rely the in important ROE the business, the are the possible hard the SG&A on reason pushing margin, loads, to As get was. buys, we components it it clearly, to – at factors the all as

going on it can Short giving guidance of alike. So, rates are, depends volumes leave probably it lot be, sales where and to our just you I is there. where to are interest of we

Steve Házy

that XX The were rate have of of already the in negotiated most one to we pandemic. aircrafts and comment the economics those were is I other that, delivering negotiated, pre-placed, prior leases months next Helane, that the the the are lease

levels, place prior Wall that understand lot they XXXX figure important to A not Street and arms at of new are in XXXX. negotiated pandemic. structures length these under are the were So, them distressed it’s taking deliveries for negotiated that were to fully

mentioned are very, they and aircraft once positive revenues. earlier, our our on bottom-line will contributions very as John So, and make now and they deliver Greg these delivery to

Helane Becker

– Actually, thanks helpful. Actually Okay. very Steve.

much. very thanks So,

thanks well, nice day. guys. Okay, Have a

Steve Házy

Helane. Thanks,

Operator

Epstein the from And our from Bank of comes America. of line next Ron question

Ron Epstein

Hey, John. Good afternoon, guys.

John Plueger

Hi Ron.

Ron Epstein

of pre-pandemic And following I kind an by How so, from just none the agreed here? should of kind we that gave, up go about you the that agreed have any we where were Steve’s haven’t on of of yet? – answers customers accommodation other leases upon do upon revisited the third he think been customers? mean, within

John Plueger

So, first. let me that hit

first your hit Ron. me Let question first,

I but and meaningfully my has lease of it, in rate that remarks, the and been not have said requests has that case. You the may caught reduced deferrals restructuring

like, in clearly, of ago, decreased. has So, space from will months more. have that have six, terms way. pace than I ago in But what where nine were is am I moved we months those do a requests sure, in we is major the go eight here, reported of totally I have a we where some different a really report, into we

side, can are that can’t getting on So, and have here think agreements. thinking top them to think head. significantly. my Steve consistency two to where am pretty as examples, we those spot placement good just as pausing living And one up just but that their I suffice focusing, there dropped And say adjustment had it to we my or I I customers in pretty on as we and switching as the rate just forward good, pre-COVID indicated, Greg mentioned my lease repaid. the made there really own of or memory might of off about – is have maybe I just here much the as an

were been staffs I say, single think lease it’s preserved. to would seeing Those I close pretty rates but largely, it. So, every case, has

Ron Epstein

it. have customers there a you do guys any of you the Got is then, utilization anything to in restructuring some it. on basis? really had, And how help Got short-term the offer

Steve Házy

limited. like Very hour hour. by don’t We

done or a We a and are we’ve level hour. – And a of floor. Uber where We absolutely hour generally, not the minimum by operator. PDXs utilization an type modest require

is not there by expose hour ourselves to are no the to hour flying. pure structure where of going a type any guarantee we So,

they if So, that number what flies hours the of less the company’s the the pay that I profit. to minimum number hours mean, that’s the have minimum airline creeps of required lease even than at floor.

Ron Epstein

Got it. final one And sense. I if That it. Got it. may just Got then, it. one. Got makes

you and to you that Do seeing you more the going AXXX the mean, strength XLRs aircraft, that think that you that saying or fits going those? through You on enough everybody some is in are to delivered. start market? of that’s rate something then segment do of mentioned flow lease airplane I type it are getting

John Plueger

were Well, XLR the the We the LR customer look, neo. customer on neo. we launch XXX are launch on

And so, book. order it that’s that that by order say to think I can core suffice our a really part you of our

continue recover But us allocation investment to to over decision. look mentioned really aircraft certainly, couple the and LR with particular even good circumstances think And fleets capital as the order of of neo Greg the see you a so, in capital And it’s remarks, accelerating we and the and has for And XXX now and industry very discipline the and as will years. allocation just forward, as very, to could dictate. I time it his facts we last of continues our it’s how part world aircraft XLR. – the be the risen that type and throughout in of proven the and as is popularity

Ron Epstein

Thank Great. you.

Operator

Vincent line question we have Next Caintic Stephens. of from from comes on the line the

Vincent Caintic

Okay. Good question. Thanks Thanks. taking for afternoon. my

question is first discussion. follow-up a on the So, restructuring

of there maybe a rates to you in is some the cash we of discount little with to deferrals sort have and maybe an – about restructurings? where work now think think the through avenue you. a you and accounting, can the expecting the Thank how plans as we the that on how terms sort of lease resolution deferrals cash are sort accounting like maybe about the reaching or that of Is when cash should to are? other So, discuss be longer the of terms maybe or in accounting deferrals if lease remaining of bit you

Steve Házy

Greg?

Greg Willis

be terms. lease deferred I your to balance, with expect bucket expect that extended cash repaid time time some – deferral great would the point goes we over number had I get into and right? of more so. a collect to and of Yes. to we’ll and accounting in on as would that record moved track doing that As

how and So, a we’ve better. made the comments improving I we I world on think getting about is call that’s how I feel working of think things lot out the and clearly, see

as would I work to itself expect out. So, happens, that that

Vincent Caintic

of the placements the follow-up – as to the is reactivating actually then And going forward lease encouraging some Great. and it’s a certainly and activity well. Okay. hear lot on XXX of placements

are As having on airlines the the you pre-pandemic color things with and maybe the give lease can the for, you to coming rates any so are lease and that you signings, discussions signing back going forward? terms, are structure levels,

John Plueger

Steve?

Steve Házy

put restructure deliveries the actively and Boeing situation, purchase Yes. cases, that’s on vis-à-vis I proactively economics years X.X question the delayed it some we of the me agreements a aircraft XXX way, of and XXXs. let our in of mean, because very worked the the to this have delay, with broad

some been XXX lease cost been acquisition there in accordingly. the to that rates on a XXX, the our market rates in So, extent MAXs, because reset unplaced may erosion lease have we have there has adjusted

with So, what is cost that Greg combined touched financing is dropped. that upon average earlier our of

For rate debt from for example, the basis finance capital portfolio paid a are would aircrafts paying means the to a than borrowing aircraft pre-pandemic. we than lower those to at have X% on X.X% pre-pandemic for are we we less and

debt depreciation – many our had we’ve reduces hopefully, come on lowering for with to can management years our expense. reduction experience, our and a expense was of many, to erosion astute whatever then cost rates lease acquisition So, in the the neutralize combined kind we which

team still been airlines the where acquisition offer an proposition. cost solutions that’s marketing to lease lower of our find So capitalize the and the can attractive goal on we

John Plueger

about you let the earnings of year, year nice this forget some compression not past will our us so build add, if that give They back business. huge, – supplemental the of me margin the the fees. just are still Those really just or we’ve very pandemic. but had, And the in and management we’ve seen growth over don’t nice are the supports these

management there add to but that. the is nothing just business, So,

Vincent Caintic

low talk be so have management from gain and while it sales you. actually, you low a been it maybe appetite really Thank been been has forth, for And like, seems about classes Can Great. for have business. question how sponsors a of seems investor the on new It the maybe rates a different still strong. other like interest might asset while. for and

Is more who just this that, So, for? interested with sort kind management? opportunity what investors looking are your be might in what of wondering, investment for – there of they your discussions

John Plueger

Yes, look, pretty got appetite investors. good I a from think we’ve

told we the forward. that you are that you, As are and I just we in see to sales we There lot a of that second and to kicking just of investors moving will want starting into that I announced aircraft and evidence new half added optimistic some indicated, want third quarter, us source am a gear platform. for hopefully platform or in our manage we them the just

the of about are They to I think few be, with. looking So, end I that any really aircrafts life a that type. investors We of are sell to bifurcated think have to continue don’t there. at or as we discuss that

who have we credits intermediates still other take some bail We take as lower low we’ll priced are there lease think we there have they mid-life which good financially the is and they’ll take side, really so rates, equipment, we’ll aircraft but no, a for better airliners attractive value out. want say, themselves the looking balance,

– at the But would a the have rest pretty of spectrum remains year. good overall I that be I for landscape feel that how it there. say, So to we unfolds, field seen the but looking

Greg Willis

these is lot put It the capital of that, Yes. to add the there to is fueled recurring market. of John, high think finds. like chasing and supplier bank of lot demand to, by I pretty bank in the to being the seems that that’s a just guys space a financing

that well that wide I open think really us. and market I think for is works

doing well for to it are here. vehicles We sell aircrafts think I works really us managed more and

a that’s for very us. positive think dynamic I So

Vincent Caintic

much. Very Great. Thanks so helpful.

Operator

our And question comes from from next the Davy. Harvey of Ross line

Ross Harvey

for taking Hi all. my Thanks question.

getting comment order just rates on on ensure that you moved kind a the In you lease mainly any the any changes how you you to on but to you I of I placed terms rates. airlines wondering the effect understand delivery might specifically has whether there right, already positive the the on had forward those? just those been thought have are of do renegotiated were am the of book, pre-COVID? delivery am to can the aircrafts

John Plueger

Steve?

Steve Házy

we the another little have very in And forward on by mentioned of instigated future deliveries. delays airlines deliveries. the my for limited had We amount as question, pre-COVID absolutely earlier the to to changes the I contracts response

that we our that these they solid to with are what stay and So they have customers airline and make resisted we working are. sure are transactions

Ross Harvey

maybe a I more And Okay. general Great. can. if one

clearly management anything sourcing in So, be might sort we just concessions the that that you’ve watched through How the agreements, adjust the some what and am not. of as how strategize of of terms in something aspects difficulties just I has some or kind come of seem the and the the look – the traded for based well I to pandemic? future of already, any post-pandemic in to you that you size wondering mean, this pandemic fairly business on strike change of the experience the the might that obtain of you you look aircraft it overall, lease of sales platforms? obviously off there on days? for does Is and

John Plueger

underscores company if since developed started done really this very off. the answer just been through through devised the jumped we’ve done I led right mean, it but difficult very but industry not we this ourselves right than pat much been on back, us We we’ve I time, – anything, that the and a into to it’s that we’ve platform that more has say, exactly going Look, and frankly wrong. that’s I would

how our a of so, negative just as financing we some and had to don’t any playbook major ever We’ve enjoyed S&P. And just we by the gotten we’ve – outlook our company cheapest to ourselves. – removed as foresee we finance changes the

why other customers selection XXX mentioned LR it? I So, aircraft have we so, through, able to think that from XLR are large change the pretty this it’s very we we mean, engineering aircraft be types. for types the we weather the and of that by we’ll and

Greg Willis

Yes. I that of started aircrafts mean, clear we years had John I just to this of in as impairments want or compared to no asset – is XXXX, since company ago. demonstration the our write-downs what our echo our XX peers quality

get you compare result. a can you So, and peers that different our to vastly

think pandemic started. long because I has this through navigated for before success management the our laid were crisis, the So, foundations

to had other lessors, I relative So, plan. we our think make to adjustments fewer to game

Ross Harvey

am you recover your peers, one mentioned wondering, looking possibly, medium were that Yes. if start might may, just to I and they of peers get the term. And going the that I they currency mentioned in in of XX% just to the reverse cash to as XX% effects,

that’s are we is maybe good expect a seeing, about to more or going reclaim wondering given Just forward point you think what when you you starting than that? do

John Plueger

I announcing are just first quarter. our at think we this – at time this

optimistic that’s I number, mean, premature. like we are to think just a think need to I’d but I even conservative I bit by more we nature give unfold. a and see that

Ross Harvey

Okay. Thank you.

Operator

Deutsche and line comes from in And from Patel it last Koosh have we of question Bank. the

Koosh Patel

guys. afternoon good Hey,

aircraft. from kind and to aircraft compare of rates going you AXXX for are to How is read those to of other as there any rebounding the late the Is were get trend rates – what aircraft did types pre-pandemic the lease extrapolate seeing through demand compared you the the to mentioned QXXXneo Airbus You actually for model? well? foundation the

John Plueger

Steve?

Steve Házy

but an the of operating we to this else But types, well the everything through pandemic. was I airplane an – an for younger asset very demand XXX-XXXs, into it’s of of airline aircraft terms example other want I we aircraft AXXXneo have quite assets performed as gained One, as that have picture which we of perform to popularity example think two example mean that AXXXs, They other well. just I an has have well performed the use AXXX the have or an well, sort has other don’t lessors. level. performance, performed that’s AXXX we in that well is and that very used But reasons. it as – think we level size it AXXX is say pointed different are just the very that fits performed well. of how and an to at asset and than just that many we the AXXXneo other for type cost. a continuing at But I actually AXXX the generally said, because feels is, types

and smaller the on bodies focus a wide real Our has medium-sized been positive.

the XXXs We market, have a strong on presence AXXX in We don’t marketplace. in any the XXX-XX have the order. XXX-X, more

our can customers. well think, even body diversified fleet with bargained to our as placed terms is said we And customers. I we are a well airline preserve of commercial I we positioned the doing and with had very for earlier, So, group that wide everything

Koosh Patel

Yes.

most then, add to that are to if guess, sense. add the what you lead to and now? look Okay. back what’s do I is you slots were what order to the the go And would to – attractive OEMs That to right makes that, of that, guess, the kind And to to I you delivery that might of going book? factors timing

John Plueger

see Look, we’ve is trends that’s already is regard. a of got single book, of order is allocation something this quite bit. already a uncertainty there between and much placed. times, we’ve Well, quarter balance some a the book that recovery still order several How we and matter every at in look we in placed capital I had said the how it’s think we what

natural book get order they certain on eye sure that to it make would recipients an of customers keeping are We okay. be forward

little premature we the place to pricing, the the think going a next or say, that no aircraft are in in to is quarter time buy buy at many we it’s difference aircraft In ways, is We the there So, right. pre-pandemic. other.

company that. the you manufacturers time part think conservative can to dialogue do also so. say we’ve we’ve reflect ratings say, all monthly, conversations our right, safe I of it’s with been that I very and is always our is, the as also to fair And tell are so, think done I we’ll weekly normal these a and it’s when But

to think and are is. bit we’ll to that if cautious So, the probably right. adverse that think terms make the be, on track it the at pandemic are is we time pricing forward ordering just aircraft particular a But recovery that not any looking the more we we sure

Koosh Patel

lot Thanks for guys. Okay. time a the

Operator

are And over I’d turn time, there back DePalma. Mary and like this no to it at questions more to queue Liz in

Mary Liz DePalma

so you look today That everyone. you you line. the speaking can after Okay, much and thank we the quarter. conference second thank of the conclusion and with Operator, forward again now disconnect concludes you our to

Operator

conclude This does conference. today’s

You disconnect. now may

Air Lease (AL) 7 May 212021 Q1 Earnings call transcript