AL - Earnings call transcript Q2 2021

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Operator

Good day, ladies and gentlemen, and welcome to the Air Lease Q2 2021 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. I would now like to turn the conference over to your host, Ms. of Head DePalma, Liz Investor Relations. Mary ahead, go madam. Please

Mary Liz DePalma

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

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

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

John Plueger

there hear intend always, more the the borders. today, Russia, to parts travel in and you see industry. surge, In given travel thanks, Liz. Mexico, has Europe, the based Well, pandemic the to with view Good balanced the China, been other travel reopening with of recovery in fly, of state as to the variant eager were international us Asia, to and call thank you, by of like restrictions. for geography, who location, the certain restrictions, parts many the each the remain the that rates everyone, by of Since afternoon, world, from last for on has of Delta you and varied countries, Mary US, passengers and air significantly opening and our availability, thanks of joining to recovery reinvigorated including headwinds removal rollout, In status air to travel on vaccine pleased we're many us. vaccine aversion by of vaccination our Overall, we borders. lower

and vary Our rooted customers same who the ongoing of have we adjusting air all do and with to conversations struggle uncertainties with are have history, and travel we've for optimism are our realistic country, complexities continuing the our traffic. by our the prolonged airline time, to At we and has rebound customers is planning by that continued which airline we the in in downturn seen that revival passenger results. to COVID-XX impact given industry's most

XXXX, XX% diluted quarter revenues, a EPS the most million of For reporting the total and to and share, prior which down for year's the part of a pre-pandemic second respectively, $XXX second quarter. $X.XX in compared we're quarter, X% was

million versus rental accrual primarily impacted recognize due approximately this recognition, more I basis discuss will not did in were we by the restructurings. of quarter momentarily. and revenue quarter this revenues results cash $XX Our to lease

While rental place $X that in billion aircraft of June, contribution providing lease rate improved providing quarter, We're we pleased rate about in anticipated, to in of our long-term but the that the a utilization took quarter our the collection of the to deliveries second took as in in we strong new million less compared XXX and was than minimal at delivery XX.X%. these first second XX%, quarter, month originally thereafter. and to quarter, contribution was XX% full the XX%

granted when of May, of Importantly, of deferrals more now to million balance our last today, decline decline operating months deferrals early XX% the nearly six deferrals XXXX. The versus our with from the net for to having been as flow, was the today cash contributed continues our XXX balance up of we as XXXX half spoke, in to XXX first than - to in million repaid. which date increase

basis the came by impacted not on highlighted agreements. cash cash a security lease the and million receivables restructuring quarter earlier, I basis where from Now from as exceeded of collection and XX were lessees million approximately by on accounting, was lease note our one young one to and this $XX package is million important of AXXXneos revenues of $XX management one Vietnam those attributable vehicles. being owned neos have lease It's assured. we where of four to customer, the that Airlines, two-thirds XX XXXXs reasonably with

pandemic payment through the with a us significant receive ALC July, and XX in a level lease airline. subsequent had impacts long-term interest as airline continue the on remaining continue We the of working the expect with did to resolution. future, from believe And to XX rental for best matters Vietnam Vietnam is of to to airline them related reduced payments these the we we payment country the that date. have The bright we restructurings. million has of in during of XXXX, the and million was While despite work the towards

we may need working and our and requests, As restructurings. airline including with I said customers to that of in airline on varies country as significantly expect health our we continue such, initial the recovery by comments, customers and my accommodation region,

We're declining Aeromexico is the I However, as told in the bankruptcy. last that in frequency very our of report these quarter, to pleased quarter, second claim we the successfully you requests meaningfully. unsecured sold

further young Now expectations Aeromexico, consistent backbone remain months in remarks. his combine aircraft XXX of the Greg But and shared on elaborate the we as XXXs you with will with this airline at the these original ago, our fleet.

go three In have fact, to we XXX-X Aeromexico. future delivery to on more yet

ALC aircraft with customer and many have case, the lease remains differentiator. in from they a and profile, relationship our our that others key with this airline on modern and As

positions placed - through for me, our order and remain continue our leases Our XX% XX%, well lease of with XXXX XX% us And book strong excuse to order XXXX. very long-term delivering for on aircraft placements I position through new ALC all airline billion our our want fleet, commitments the book We're placements. $XX.X with and has of in discussions future. remind on on customers order to you robust placements. current revolving forward that aircraft having

AXXXneo the Specifically, aircraft, we've now our interest of in seen our increased including AXXXs. single and new placements aisle

addition, customers. reinstituted canceled seeing and few for In fact MAX in our demand previously for the aircraft a of we're additional MAX have

emissions to proposal is levels. as up XX% jet which to single aviation reduce in XXXX rates emissions which of fact of compared the known for improvements. showing you within integration the XX”, are to “Fit miles gas for about Green read new Deal cut by fuel. XX% XXXX Many can to sustainable as greenhouse legislative compared this lease fuels, package net An traditional Importantly, European aims package advanced by probably important

Our equipped emissions, elements lower in fuel further noise new aircraft smaller NOx airline's like handle lower only case already maintenance including by an book. order fuels, young with aircraft, the those sustainable when benefits our these to aid modern burn, to young, operate and lower aviation business costs, combined aircraft modern footprint, are fleet achieved and operating a

on XX the Looking of XXX. ahead, although all pause take we of second have OEM you're contractual aircraft aware in commitments of delivery Boeing's XXXX, half to delivery the

juncture, XX-Q will we Furthermore, some our been through end attributable or have year. the these today to As this the shows, at XX is take by estimate of of table year. of unclear XXXs is to deliveries But the our Airbus remainder how XXX slippage It in three the delivery many aircraft. approximately we take scheduled chain commitment best of supply we for this notified our in issues. AXXXneo COVID of were recently

OEM these delays, approximately of And quarter, in fourth aircraft occur the translates that to occur delivery of the to out deliveries aircraft XX $X currently the XXXX. take approximately stream. we Given and to in quarter of expect XX to contracted of third X.X billion billion

to well want comments will I into growth we industry parts to believe end is that delivery by occurring as for current we fill aircraft continuing Given of air ongoing year by many I shortfall XXXX. our possibly this the throughout my to the scale the them. saying we the in travel aircraft the selling versus And recovery. remainder assets and OEM attractive significantly in resurgence these world are favor and buying for began for our back environment aviation help set delays, encouraged of this sales early investments, see and

Delta continue to given to still the dampen this through recovery, be many will countries are challenges, customer temporarily variant pandemic. expected, are work and may any that through battling prolong which or the We

world. XXXX. per of recover for share our desire and need However, over that, me lead With international commentary. of to long-term continued the travel traffic quarter another the to from air global Reflecting Steve for the pre-pandemic, will Steve? strongly declared travel confidence, this has of air witnessed turn time, levels follow over people will Board our seen domestic additional let driven that recovery call we've of around view second back Hazy we to and by travel dividend that the Directors maintain $X.XX the

Steve Hazy

we've do once what which We're months, they're John, minimum and witnessed limitations. by they that is eager encouraged over thank in the all much. feel allowed several public to get back indicates with very last the to so the traveling safe you air

occurring. As we two-tier seems a be recovery look around the to world, very there much

The as income lowest the XX brackets. countries and highest incomes developed versus the as the in vaccinated those times first getting markets, with with than regions is emerging much with faster

study research also process. that unvaccinated for across steady willing their As organizations world, at reopening travelers. can a agreed conducted a time, data to by reduce should air to travelers the destination. chance vaccinated less IATA In they shows as around tests vaccination that cited if we're the see medical at that same we of associated IATA, regard shown quarantine pre-flight a the pose with part and travel rates will XX% not Yet globe COVID-XX some has has the risks testing of populations, of travel. said the which the XX% risk help local travel of there's in undergo respondents overall increase,

allow travel. benefit further could move a past rebound the air and closures travelers significantly with broad quarantines So or can the in this those and further governments test, to border negative extent vaccinated

key other in those are that lower if vaccination will in most vaccination in than rates the ultimately the are We in rates countries. even areas hopeful drive increased locations, developed markets reopening

place. have travel has recovery travel domestic is that of release with tier from June as domestic XX% international latest more travel that XXXX, control, the seen same of capture demand has IATA's proof second not versus travel growth late look information many we were to lagging. three of June down for If travel for certainly remain improving and travel in domestic restrictions opportunity only as is or exists. travel of versus to they Domestic RPKs the Euro international XXXX, been international in Per down even quickly afforded The more data international, XX% whereas last at June industry-wide XXXX. months. the two trend we compared were latest traffic the And

China, Spain, In US waves will X% including reported For XX% be of XX%. levels. airline domestic compared France, as one volumes in continue Europe, recorded would of of United driving recovery variance, several most demand within progress, an and above in and flights XXXX international the domestic as in passenger levels, recently end XXXX domestic summer on whereas others. impacting think was go down at XXXX the January were to week, how to suppressed policies the example, that eager below nearly only on traffic naive down government Similarly, the international XX% whereas level, departures an January depending develop. And were States, current we're to see comes is to not COVID we re-openings. countries, Obviously, to evolution will increase they

views However, domestic seen for via significant is that these recovery. reinforce air there data up travel, points our demand travel pent

ultimately perhaps will For by of in traffic continuous travel driven scheduled ultimately of global be could at and this surpass over 'XX, could vaccine the IATA we or one-way forecast believe removal be that rebound barriers, that more that by the even XXXX, the the We passenger be quickly. and XXX% passengers continued rollout year levels. see XXXX trips. X of airline were And we end billion should forecasts

second are and with placements, as United XXX quarter, Our body new China, aisle the result, are we In discussions airline we aircraft them as and and and States. new lease ongoing. in AXXX trends we Europe, East customers Middle AXXXneo are to are, aircraft deliveries Latin same delivered productive wide the on and and new our witnessing a America, having and Europe the single

the We when one to successful with from used aircraft contract book. like will are to are from the Airlines Alaska of for late of Allegiant ALC delivering and MAX AXXX to fleet choose XXXX. placement order placed in recent continue XX saw we the AXXXs these the in We fleet it leased our airlines, agreed young become those Allegiant's from XXXX purchase a lease Alaska back press carriers. Airlines our meaningful operate Alaska aircraft aircraft, releases, new also and example, component you we and of ULCC the aircraft aircraft young replace These with to in continuing younger XXXX. most to

of XX%, XX% XX%, age of and were the XX% fact, old years the end range June, in industry only aircraft that whereas in back of In information over back were indicates X XX under the of service. in XX years service five of as the were I aircraft of repeat age of aircraft service, age the to in of

will As John on continue sustainability we with believe be of and the trend earlier, efficient initiatives, to global operation center, a front mentioned fuel scale. modern, aircraft

Airlines in Boeing fleet from seeing MAX XXXX. lead throughout are emissions You as airlines announcements significant greenhouse which gas an this placed order efficiencies, by aircraft emissions with replace AXXXneo XXX and for aircraft, and United the Airbus reduce strive over world. in reduction improvement to older XXX% fuel carbon recently will their they in to

number reducing Airlines, ALC aircraft, purchase tackling a by of similar to XXX-XX initiatives has also Korean sustainability airlines the of from seen committed aircraft which the a direct is of fourth announcements the recently aircraft deliveries also Airlines Alaska new airlines MAX quarter number the to ALC, aircraft this delivering and You've order on from XXX-XX. years. year. new utilization aircraft including of Korean by leasing generation fuel placed achieve for over XXX new XXX-X of XX with greenhouse from introducing in better gas like several beginning efficiency, the next new of the also a substantial

for increase operating fleet the initiatives, our industry over of that, to critical airline minds pandemic, quarter terms on investment, temporarily And in to time, degree, to evolve, before. industry's fleet forefront aircraft infrastructure with turn will more the tackle over very to needed much will ever I the costs, second the of even lower commitment modern critically order young overshadow continue Willis, technology in to sustainability in the the environmental and better Greg our overall I some operating our results XXXX. still need customers, is detail believe, than of efficiency. footprint, and to aircraft advancing of it call changes etc. we book our more modernization, making provide While CFO the the our financial

Greg Willis

Steve comparative everyone to remind financial by to I Thank fully impacted and everyone. details second results not quarter. was of would for on afternoon, like last that the second the quarter the I want good underlying year for the purposes, expand pandemic. our you,

past despite have benefited our which revenue has the year, aircraft $X we made investments, billion pandemic Over over the in line.

lessees million revenues have the Vietnam and impacted quarter a until fleet cash John quarter XX in cash compares lease expect compares the million first and last Hopefully with basis Aeromexico. basis reached XX year. XX first basis year. in with XX restructuring But cash XX.X% favorable In under our we'll we XX, million However, total, basis. cash we as net value end quarter resolution from resolution of basis pressure. improvement our quarter cash mentioned, June by book the of other numbers of stemming from with of by of which lessees This negatively of a in XX.X% came represented that lessees the to as agreements in were from and will fourth the the the of remain then, 'XX which accounting, on million our to the

think represents on of to Aeromexico our I of it's past full our important expand claim. on commentary due sale bankruptcy The recovery the receivables. sale a John's up

important negatively we this So, with we're in were period, that will in these this to all impacted the losses situations note earnings through recoup pleased while but to It able our prior outcome. not result, were end is sale.

agreements. rushing behind cash to keeping of customers Additionally, into want accounting, enter on I restructuring our to highlight instead rationale

cost the While to reduced, over accepted accrual the lower higher better would come would we at gives but given at financial but more the returns to return earnings a takes typically if life restructuring restructured the negotiate time. which settle, and process of to rate us We accounting, simply lower lease outcome chance we economic quarter new impact prefer in a be agreement. in believe of rather typically a than that the this a

accounting meaningful preserving John been was effect taking drag short-term prior impacted mentioned, to shareholder returns rental that a pain long-term million in for attributable restructurings, resolve, much value. and maximizing quarters. in XX second cash while of has were as quarter, place and economic and So, restructuring which took the gain are in we negatively by Earnings revenues

million call. reported Finally, million as with XXX repayments are decline of from which our total on our last net deferrals the is we a activity of today, XX% has total million, XXX continued Repayment These receipts gross cash repayment XX% are the our has our deferrals or in and increased significantly reflected which recovery of customers. the granted. aggregating of airline operating flow, XXX continued reflects

in Looking at are we million aircraft aircraft second four repurchase aircraft the quarter sales, sale and This recall million trading any XX.X we sell you will compares XXXX. not gains that that debt from below other to recognized par going and noted the in of the maturities short-term of in second the to activity, quarter. XXX in

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

challenges, the continued recover world returns accounting as margins that important on decreased are the the remains growth rate to last continues X.X% quarter second generating which attract compared in from from X.X% largely to fleet, think as composite SG&A note positive continues while as I the Our pandemic. the to of it's and off our should cash year. come flat Overall, improve customers to equity, despite XXXX. our to of we Depreciation

advantage Finally, significant to on provide competitive which continues financing touch us I to our want peers. over a

primary We billion end. source over debt-to-equity balance maintaining sheet, a the assets as debt XX are quarter with a quarter, unencumbered issuance. low $X.X X.X of period the raised $X.X to ended ratio our in year times unsecured of investment at billion capital dedicated have in represents We a company during on for five and We financing GAAP record basis. utilizing senior grade debt for billion beginning a issuance X.XXX%, which unsecured with second a at a

liquidity points, XXX senior we elevated to with rate a the the until of ALC. We for floating levels the of million low over raised maintaining XX call And which another turn LIBOR aviation back basis broader that, at I call. market recovers. Mary of another unsecured for Additionally, notes will record Liz question-and-answer anticipate represents plus section

Mary Liz DePalma

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

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

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

Operator

you. [Operator we first Sachs, Instructions] line from Catherine O'Brien Our have is Goldman your open. Thank question,

Catherine O'Brien

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

John Plueger

Hi.

Catherine O'Brien

Hey.

how still So acquire I a with to don't additional for there But, I out market I'm OEM And better delays? be you if given attractive aircraft? they might think seller's the the you market of positions. to you rolling lease aircraft. guessing John, want said, market? to But sort market me any delays, are or secondary most don't aggressive it's wrong, so, I'm Where you. Thanks. seeing open these looks have opposed opportunities which as back be, misquote today you just think buyer's correct if and

John Plueger

Yeah, the us, sure. past seen in quarters lookout and that. the to we're I do aircraft, incremental many buy in continued Well, you've on think,

opportunities, prospecting we more us you'll quarters. We and as that think coming good as two I we sit on here today, see to quarter the from over some see - announcements have

on most on the that's They've to On of continue work available nor and actually side, their Company. lot sell are whole good. been available sitting aisle, the a the shelf yes, the XXX at Boeing same Airbus OEM inventory single with managed both the MAX not to of manufacturers, product we from

to comment buy me time to than Let let sell. it's a better to me a back of, go

so We on us, are aircraft Katie with long to have buy our to leases, credit. people young good many coming want that that

in that's in We have that. to to come people a also do earnings. our But of ton the core our growth of

assets reduce We could investment, rather wanted to it. making we even hand, are asset instead these these conscious the But delivery delays, on our need other if given we really base to. therefore aircraft this good and In We'd time. decision. demand at fact, of service far have more we grow than keep this we sell than less them

company, right is a that still decision, buy the it aircraft. I for the think made to good we've time it's decision and so And

the to be could quite I earning good if But there's need deals But going on, they're set for we I had. our great I aircraft and assets, easily want for forth, think we still to we're reasons that just to. wanted be sell clear, have growth. to hold we

Catherine O'Brien

Okay.

we gain. versus So managing earnings short-term ongoing also that of have conditions market a mix

John Plueger

Yep.

Catherine O'Brien

Got in it. say variant those a And change negotiations, fleet leads request then inning you ago? couple for that we're the your what of slowing has the time. in, terms Okay. for comment what in Delta heard inning Thanks versus in we're for across months and frequency, are the would your view again the on say

John Plueger

won't you that? take Steve,

Steve Hazy

don't Yeah. other restructurings any I or think variants. because specific we Delta deferrals lease received of lease any or

obviously, goal of most higher landing kind fleets I at that few time, the to to are we're the basically over-flight in in as lessor charges, that are to approach. what Since And operating expenses have aircraft reduce at the they flows the recovery is slower, least on cost adjust think months of we're their less airlines a and so have operating that is on. they're fees, desirable and where Because cases own last ago. what were in compared revenue their projecting we planes is they of expenses. youngest feel seeing maintenance, they their fuel, looking trying the

They've year. I new And employees. done as year. better these requests, airlines They not tapering have seeing much think of down of did last realities. readjusted adjusting last to since support. laid we been off It gotten coming we're their has job infrastructure. deferral the They've government fourth as really furloughed employees. They a quarter So

to airlines lot have made readapt the of XX their in So model. progress a of kind months business last

we of airline of seeing have restructuring. fleet, consequently, for And the our requests and customers, we're because the fewer fewer quality relationships so with that the

Catherine O'Brien

much. so thanks Understood,

Steve Hazy

you. Thank

Operator

Our next question is Stephens. from Vincent Caintic from

line open. is Your

Vincent Caintic

question. Hey, taking good my afternoon. Thanks for

going So just income about the to think how first forward. question, rental

offsetting and you think So I part, appreciate understand. cash how when about something about I comes rates rental you the weren't think eventually you. for instead, the to two lease back? that, that, to this we I I lease components anticipate income revenues guess, lease suppressed should but model restructurings, extensions, The million XX that Thank that recognized a Or that of the understand accounting be just that where I how is quarter. think we maybe is forward? going while, The in that,

John Plueger

bit over think - you've a get Look, extended, a that get rate. of leases period much a added recovery. the do a achieve longer additional at handle hope a got term But I Vincent, probably time, balance so of we those on. equivalent over we we to restructuring, usually quite anytime lower of

how I is think requests comes rates. - our tomorrow us us our We go. of dependent you We how customer and just know say, aircraft good the airplanes we flying how our first over with lower okay, that don't lease Greg with much are don't gives that flying, a and idea our point is making customer was the utilization, say, at and just here to need one that so And we and look hey, roll if our aircraft. of much. the things we we is are airline do very

payments think over always get do try the but to term back. it you usually do and was. don't those the keep not on link the it's deferral, present the always that's longer original preserve Greg's and That's lease economic, original every But easier point the result. an view we still lease say, value you year, a stab. that, and and time, time, that X a time we But depreciates percent hey, have break, is we but to over having economic and I our where of yes, get little try, you approach we we try your of said much, restructurings. point a reduce we we'll so can with and aircraft a look, what as imagine, of lower an give less. But We're we'll a the equivalent to do restructurings, lease lease lease from you do So and year, try so as deferral for you first or that every equivalent period it easy recapture, pay of keep we payments period because first get if

So look it. how that's basically we at

Vincent Caintic

very helpful. Okay. That's Thank you.

Greg Willis

into Yeah, we also to where handle to the I they add of quality arrangements what lead half for delivery. consequently, with aircraft And first the temporarily. airlines of out future appreciative year, this very of from these can OEMs. but in incremental not other we've us the commitments them for entered XXXX with suppliers, in help did, just on with helping our want were situations grateful worked And to We've that only additional had them way aircraft, a and number they with and to business. we the lease

the we based things handle we very, which So, in lead the very and could leads to further of much relationships these on incremental financial can and the future, that how then business way [ph]. viability airline enforce are

Vincent Caintic

And helpful. Okay, Thank very great. That's you. questions. related then, follow up

do next happening - you recoveries claims quarters? previously very rest it cash or the the see Thank look the of for rest or the for accounting, of couple on So Aeromexico they that to nice you. you accommodated year else cash sort you're talking had accounting. of been that you more airlines see have the full to, you've what of anything the was repayment When at

John Plueger

really Well, predict, at. there's no can just Vincent. now that right really hard that bankruptcy looking that's to say imminent I we're

we remember, action. bankruptcy claim a So, sold to pursuant this

can't with we, we make result. we similar can't our we're a any assurances so of and course, really any would going of situation that that not get forward customers, in imminently - And

has it. - we But claims get from get claim. were just to of customers, horizon are x Aeromexico, that bankruptcy. nothing nice this in x we is this a entered able comment the in But But them most in on the to to how certainly made our generally seen over - speaking, we not in process. And pandemic. bankruptcy I restructuring pandemic his business; in airlines from we're think bankruptcy payout well, that know this Greg remarks. going says, manage just think have the of I I new accelerated think to to decades of because really ones and the into number I We've really that can the point case that going that there's

a they've We Air aware few like have that of smaller a their very there's imminent nothing ones, really horizon in today. on been for But Mauritius, we're smaller the while. bankruptcy ones,

Greg Willis

now little world's I many did claims that, that think, don't working majority a that right bit why add the to that we're reason a is to bankruptcy John, of miss the we have just we bankruptcies.

So, trouble the there. major other had one off that of they are exposure is selling because other situations people

claim. those I run, perspective, a to willing to past So, collect that hard But figuring well I credit able of to say monetize large working of good team of claims, were high believe lot able and working numbers. out that outside upon think we a time, portion is a we we did cash year from be to our and and missing selling we're be will those recoup. we team for hopefully on weren't underwriting our But of basis over terms recoup balances. our ones. able pretty ways that's very percentage what perfect, customers really to in focus our Aeromexico me, bankruptcy with on point And able to those mean, a collecting

Vincent Caintic

very much. Thanks helpful. Very

Operator

Our is question from Bank. next Cacanando Deutsche Hillary from

your is ma'am. line Cacanando, Your Hillary open. is line open,

the have next from to Moshe Suisse. Orenbuch question, Going Credit we

is open. line Your

Moshe Orenbuch

coming there follow over cash impacted pandemic. on in seems - been way income back have to where basically has just the you. Maybe some deferrals thanks. there, think been now income Great, that there's that's or of are flows it The like kind I question, your three course prior to the impacted, categories of up

a becoming payment cash had loans, July. partial cash from flow you Vietnam you basis The during that think, receive a been it's did I said So, positive. John,

in something I'm So, there drag that reduced that a missing going is there? that's future, reasonable the is to it or be to think

John Plueger

be Well, from Vietjet, point Vietnam for a just the government. owned to hard an Airlines, Bamboo and But And June. July. with Vietnam, others, the payment We at stopped by in this flying was airline important outcome if at all predict in you look, Vietnam. out. will Vietnam, look point it's where is did time, for the get part it this in We, fact, flight its most the in that's to statistics thought carriers basically in

$XXX how the - go their very lot million can a that into has flows, that support. work so function announced off cash and debt and just out has sort and a governmental Vietnam intended to service of government much injection with the cut And to equity airline so the their their tied we And this also is they of that and thing. of

So, yet. being to unknown still are we And an a XXX% at their government of governmentally-owned, really pace is really that that a down comes bit funding.

population forward. this the a this, predict they hard, end obligations. much year, of just various to XX% as evade, to need that ours. almost that really with it the them And our I temporary here but creditors. I ongoing just over government of and young, that COVID, the have how just been - by that through, satisfy know. over us airplanes not has it their We're Their hard But looking that look, told not when discussions, hard, their trying very the their they estimate, aircraft, to view am if these how shutdown timing for don't they've It's Moshe. it's say That's phenomenon. is having much they statistics I different some sit are when come just from help need I their funding and funding, to and working we and much frankly, issued really that to be But today, estimate don't the down government, saying to comes is allocated know, they for will vaccinated. government's of example, assured So government. do

It's these give and things a to So prediction. you to we really it. just monitor continue hard at look

Moshe Orenbuch

on to because just unclear then bit up this. the still And follow a restructurings, I'm on Okay. little

but there you mentioned are fewer has So, had increased. the balance that requests,

$XX around should what kind and we So think that balance turn for million the how actually process that? to is decline. about of is that mean, I to - start

John Plueger

Greg?

Greg Willis

A it slowing clearly John's would Steve and I point with a lot Yeah, the comments about I of requests airlines. it, things working is lot to of through mean, with Vietnam.

Moshe Orenbuch

slowed Right. in But a QX. is there's number but - QX Greg, was you bigger than that number in said it the requests

that's to turn I is the and it least What I'm around that understand. factor in step Is that a the causes trying factors? number So decline? in to guess leases, ups what that they're

Greg Willis

is go It restructurings when play. authorization of timing these of into

fact, the at the Some like. of of end quarter, them in very the and went into,

John Plueger

upon also So, Moshe, we on that part say coming in have when have we many restructuring is jump to also we the less of that we we and us. amount do let also me that - add airplanes just frequency here restructuring But to with do, airlines airline. less have how depending side, we restructure

from are number talking frequency type, amounts sometimes larger. sometimes more up, the sort wide upon larger individual they're we're aircraft. dependent how body more So if are rate to is restructuring, the about and are, the how had aircraft. goes say restructuring of they how itself when actual we And with is reducing, usually much - airplanes They number the The do thing. expensive big they customers. of many that we are, they're

think to way I think best the So it. that's of

We are - experiencing

Moshe Orenbuch

then probably - better would have information been have to for been I have think. would That that us,

John Plueger

told way now. really it. we've Okay, to that's think of well, you anyway, best the And

airlines amount the dealing aircraft but down. summary, up restructure the based number requests of simply and with little might in just went we're to go or from those could value the capital bit the upon of It be a So up having we less aircrafts.

Greg Willis

our in is X% annual mind million Yeah, but XX of the that keep revenues.

in that perspective. So, let's keep

Operator

next from our have And Baker question, JPMorgan. we Jamie

open. is line Your

Mark Streeter

actually to internationally, Hello, line they're got John to AXXX degradation if questions say degradation, everybody. wanted correctly. sure and our that make He's due so Streeter Jamie. Mark is I the their grounding just fleet with Steve, in. fuselage we Qatar It announced on that

them. terms your view this or on just something if any have in you I don't general, this we your concerned of of AXXXs know thoughts So just should be them wondering breaking AXXX what your news with is in on your the is about? with relationship

Greg Willis

is renegotiation should with Airbus. headline The headline wrong. The be fuselage

John Plueger

from So, be they and the just about over you leads of Mark, through technical guess, how do is expressed to degrading, painting read some concerned them structural I time, that concern which a perspective, element. has the have to paint with if kind

shared concern seen airworthiness have not any airline, Airbus other us have or no We nor we has on AXXXs there's this any there there. told any by but for concern by least authority reason that other

what for so can't we'll and not saying they their So just this from a heard Airbus, further. development, basis We've what saying, really not we've heard I not and this they're other the says. new aviation to fact other else. And aviation I have - I'm don't comment I'm any authorities what it Airbus But see is anybody from have minimizing we not heard have from it, just it in authorities. know

Mark Streeter

That your the the collection because the have than really exposed sort sort if you everything and today's directionally and I little if aisle. I'm to talked was maybe that Okay, this, delays. twin like, take wondering unencumbered to the played you an simply you valued. gave really mix, with great. of just and rating, on today a so a risk talk and disclosed, Air Lease or I of about wondering specific I'm credit you're single can versus do it bit if how versus think but get something your twin-aisle, and it you lessons about of be has But balance a how to so. pandemic advantage, were to travel step about twin-aisle what you and trying strategy you restrictions we I half have trying we collection I'm you single-aisle valued step production clearly, I having at, going to to divide thought twin-aisle further And know forward into am back forth. your about you going given wanted rate, if experience versus just been, and to don't taken much like of single-aisle this, portfolio a international want think about then sort that higher step portfolio. mean the know year sheet and Greg can have and a learned things isles last more just take more in here, just a from back market competitive was clearly out

out throw a wanted big but I question open-ended So there. to it

John Plueger

Steve?

Steve Hazy

aircraft versus That's of Air don't I are airlines on our go France, Remember airlines a and rates lot an appreciable us; single-aisle. a single-aisle Zealand, and our that from could wide-body there's KLM, I Mark. collection question, wide-body like in difference lease New good think on. that with also Air on aircraft

we're a seeing is wide-bodies. by issue driven that So not really credit

corrections any not situation the making ALC MAX as did are We had today, much is the that in mind where of aircraft deliveries, and we And particularly some and AXXXneos, on and we had in that the fleet. we mathematically, bear significant were have a year is as late. a lessor percentage we half, delays the because reason largest customer our have of biggest year Airbus for Airbus. But from composition the

single-aisle. majority higher So of aircraft go in program, point we taking of dollar going our single-aisle proportion from CapEx a the as up a of of our are forward this than is that we forward view, but to orders wound delivery great are with be because twin-aisle corrected

have ratio wide-body term XX% the single-aisle, is have forward, around XX% to orders We of array remember and to much best is ability dependent offer very from our single-aisle. remaining that to corrections to contractual loyalty wide-body, a and of penetrate and wide some ability rights. goal mentioned aircraft to But will long convert lease both be on to the make earlier, to going our to those types. our markets And going I in customers we and as single-aisle those many and us. customers, our is from obviously, we're aircraft wide-body And ability utilize

Mark Streeter

much. very Thanks Great.

Steve Hazy

You're welcome.

Operator

is Our Mark DeVries question from from next Barclays.

open. is line Your

Mark DeVries

a of impacts been of the for visible more Yeah, it's particularly destructive It seems thanks. warming. year bad like global some

is, among that forward the accelerated targets probability pulled are these of cycles customers? and reduction normal my are question emissions you your replacement about So get some thinking how

John Plueger

can't about setting years weekly, what or I politically, you might don't goal the be, let's of it, particularly but thing one - they a be time. mean daily, be look, if mind, forward, a that's and It there, I all like to goals want, the been Well, are overall achievable; or The to what's nice But very think people great good I compliant. years ahead That's well, going advance could if it, by say, be operate gets IATA that's get result It resonates it's that sounding thing achievable, and back years. met, keep but, OEM not I moved airlines to the the but in has monthly question can have done. industry achieve think cannot consequence? to industry good. timetables So know aggressive goal. and just is this there's can't hear to a that, be moved five that say. if manufacturers three goal any good that

setting the set popular, aspirational saying It's popular, are And is have I thing, difficult. by very these more it achieving goals demean to but these these is it, these very goal where programs. I'm think environment popular meeting So and one I'm is goals. And an think trying important. actually we not to to much in I that are

in to I environmental under is in Our aircraft. remarks less and huge OEMs sustainable up to more this be This but have mentioned new is fuel. to planet aviation and technologies threat, Air innovate people up they in achievable. my who build a Lease is the And about Corporation.

older along be We accelerating with of are, to hybrid some certainly efforts, aircraft, aircraft the the fuel younger developments electric of toward by but course, watching best, in seems most aircraft, hydrogen, sustainable eVTOL aircraft. aviation these achievable path replacing

here So the us answer if goals what's and going of industry is sitting to there. happen able advance tell to is today not the get the can you none

see. to We will have

Mark DeVries

Yes.

guess the the retiring an new by may aircraft, was, clearly they a that question while I it older one. root can objective So longer-term be buying of just not right, and at

to about meet question airlines, to think for - So I order it in the good going of at becomes guess that position does be new the make a that a aircraft sense all kind think in necessity is, bigger if on demand? book to to even

Steve Hazy

is yep. That consideration, serious under

Mark DeVries

you. Thank great. Okay,

Operator

of America. is question Ron next from Our Epstein Bank from

is Your line open.

Steve Hazy

Ron. Hi,

Ron Epstein

Good. Good. Hey.

some with what's So can on on color XXX? you give going us more

John Plueger

segment the FAA. you of a It found found It notice XXX in of finding by of by think, and the and Spirit I was out. AeroSystems was bulkhead that pressure Well, Company. as Sure. look, know, the wasn't statement of XX the the found there forward a was Boeing Section

working And Boeing been bulkhead are believe that those are parked. the sitting and believe that pressure so from. working make with happen. pressure the that have replace this there where all forward solutions are and to forward in place are vendor Spirit that hard to I in And very And I aircraft parties comes there bulkheads

that where not is of coat based put XXX. the note on putting that required. them. spec think, delivered safety of my in no there's that's to spec, over those the program. upon restore on understanding a very, that's, it's that which affected as think further and But it's is long And the work important I is shims is very, to the make hasn't in going as We're pressure original I production drawing now about bulkheads, bulkhead design to conformed effort would and to and paint from a forward talking little small XXX those those a in add just The get not fleet. spacing little beginning the meet very just were what than fleet a gap. issue - replaced a cycles is units XX,XXX cure very, criteria. less units hair, pressure about that pressure here bulkheads that more very the anything this that we're have in a sure simply in meet I talking very than a with leader That shims is apparently And vendor thin their issue. This flight of by - the human

Ron Epstein

are fixed on the there fleet to Now an some Like be installed get is going have to going to something? already? or on check your impact they

John Plueger

Doesn't so. appear appear. No, does it not

Ron Epstein

Okay.

previous have then it. I of you guys of stuff, you in on following maybe think mean your have do dabbled and kind some And it? up thing? question what do whole that about eVTOL just peer any of thoughts environmental about the that kind Okay. I on companies mean, guys

John Plueger

interesting Look, to technologies watch. these are

yet enough things. case lost count. continue here. we seasoning not looking Having lost look to on of don't certainly now what frankly, know, yet. Ron, it. we're information we're there many, just looking a you where we but seriously, meaningful of That and these at that, to watching at think I a different all we've is hold we don't this; or We to evaluating, the companies whether said could see do business we're - have As But business many needs profile really make I some pause are we determination come, short

Ron Epstein

Got it.

Steve Hazy

this mobility And is more, in environment, very Ron, for operations. an urban for short-haul

that aircraft So go current can can X,XXX see in miles, technology the just that any of business segment and that which we XXX that. serve, between essentially we don't is X,XXX address seats, north

So know products so be. yes, residual than quickly, what and values will electric quicker is these We even cars it's interesting. Technology of trucks. don't the very growing

five make where business us, this for it's we're But this going very in to obviously, hard to So moment, to we party. it's at the just embryonic attend operational in Once three projects going to an be years. point to see is stages identify view. from sense of long-term going very addresses that early only the we're - short-haul party a and opportunities be

Ron Epstein

Got it. Got Alright. it. guys. Thanks,

John Plueger

Ron. Thanks,

Steve Hazy

Thanks, Ron. care. Take

Operator

Bank. is from Hillary question from our And next Deutsche Cacanando

Your open. line is now

Hillary Cacanando

Hi.

technical some before, I difficulties. about Sorry had

previously MAX you which before customers. restructured with and for few mentioned on MAX your for of But a the I your You you're seeing have that Boeing purchase previously lowered acquisition additional reinstated know aircraft cost. that agreement demand the have your XXXs, canceled

have aircraft or acquisition able does Boeing on orders, to renegotiate reactivation previously to based work? you go So to the rates were those did lower canceled you Boeing, back of How costs? and orders with the the with reinstate that the

John Plueger

Steve, you take that? want to

Steve Hazy

that prices that reactivated back change within Boeing and aircraft reactivation, One, we the airplane. to a in initiated the is on the be will cancellation at months, we because but Boeing look, airlines interest have had could made XXX. the they there have use the those in aircraft point, XX that the aircraft have could components. that pricing the said, or renegotiated two not either comparable heart other reinstated to deliver of determination have below a Yeah, this And on themselves we the went actually and

you referring exactly, I think, what were So to. that's

Hillary Cacanando

gotcha. Okay,

that Okay, makes sense.

Steve Hazy

that Is helpful?

Hillary Cacanando

the know aircraft have That yes. for question impairment write-downs in definitely I then taken since just think makes Yes, an you've - I any you. don't XXXX. of any your sense. started or I accounting company And of

John Plueger

Correct.

Hillary Cacanando

the I kind you that accounting was should be what So down. whether and just wondering assess to not of in trying remind asset process guidelines or using could if us written you're an

John Plueger

Sure. want take you that? Greg, to

Steve Hazy

question. accounting an truly that's Greg,

Greg Willis

the Yes. for That's an cash I flow fine. got is it. impairment undiscounted Yes, GAAP test test.

your have cash a if to point the of compare look you're go four discounts. up and with to undiscounted situation, a you So value. airplanes impairment discounted go cash because - change in that have that experience then XX an get pretty buy in perspective, flows worth a aggregate and day, purchase bulk on we And carrying your end from through you in we allowed that time flows plus it's our up when estimated the value, at to with the contracts, three to where difficult XX, the you supposed a driving volume you at age, to to aircraft. fleet residual associated we're years of And years' basis

on we're lot have possibly and you can advantage associated value. So giving and buying us these there leases that of that are with a our then also the have you point contracts long-term entry very an best

issues haven't it's So we not surprising any perspective, from that that overly impairment. with had

Hillary Cacanando

Okay.

flow? it's not cash So discounted based on undiscounted,

Greg Willis

That's True.

Hillary Cacanando

FAS Okay. And XXX, right? this is

Greg Willis

Yes.

yes, ASC but, FAS think it's I I now it's believe old XXX. XXX,

Hillary Cacanando

Got it. Got it. Okay.

Great. No, Thank you so you. Thank totally Okay. much. that makes sense.

Greg Willis

No problem.

Steve Hazy

you. Thank

John Plueger

Thanks.

Operator

Bank have Ron of we Epstein, follow-up from presenters, a America. And

Your line open. is

Ron Epstein

Yeah. Hi, Guys.

John Plueger

Go ahead.

Ron Epstein

Yes.

in maybe should XXX, third in half those to the opportunity they of a better. mean a about build airplanes airplanes, until could Just start particular, - an Our some pretty their them acquisition of right? it of of clause delivery. about are in to of be delays late. on have been Back I have airplane, up think in is some price a you of substantially upwards year, to How given this that? we are better sitting deliveries if mean here pushing triggered quickly - how those year that the I late probably sort of think get guys terms estimate nine on airplanes delayed months some MAC do going earnest at don't around the on I hope really is we have do point,

Steve Hazy

reality face to the notice have Boeing giving Ron, we're response customers have of we situations looking satisfy airline-by-airline an just we cancel to and then is our aircraft, accordingly. where see to at to an that basis. could And airline be from there Boeing the can may we'll on and what whether

begin come very now, XX-month it's it's to the point It's when But certainly up XXXs with increase cancel, hit whitetails. will customer more right more So right fluid has deliveries. going to difficult solutions, pressure to Boeing where the the situation. that aircraft the to to not as and have predict on

John Plueger

have that let similar we could the entirely me it's a situation Ron, just MAX. in to had add, possible if that to what were we happen,

be, from know that we three an what, have I we're And be, four but XX-month then could or could clause. And months now, you months going know, later, far how months, reinstate we it. exercise many four to three off. or could then say, don't we could we So, airline hold

we so, They've I to thing. very want accommodating, the flexible, get want delivered, airplanes And get we've Boeing and on been relationship great kind flexible, I delivered. have and say, to their think they airplanes got a of with very this to pretty

subject we it's the no of idea months in Boeing XXX-plus be XX how I airplanes best So many be our work but collaboratively, customer's could some I and our with of certainly triggered. to that. have these cancellation interest interest think could best points possible

right be hard to could say that just but that it's few forward-looking to a have We months, now. subject in

Ron Epstein

Okay, great. Thanks, guys.

Steve Hazy

Ron. Thanks,

Operator

at I would further conference There presenters. back to DePalma to like turn this time now for are the questions Ms. closing no remarks.

Mary Liz DePalma

Okay. That after forward today. our look Thank you you. again for joining. for quarter. to We the you, everyone, call concludes thank of conclusion Operator, the third with speaking

disconnect now line. the may You

Operator

concludes a your wonderful this today's Ladies gentlemen, participation Thank presenters. you, and you conference. for Thank have and day.

disconnect. You may all

Air Lease (AL) 6 Aug 212021 Q2 Earnings call transcript