AerCap Holdings N.V.

Good day and welcome to the AIRCAP's third quarter 2019 financial results call. Today's conference is being recorded and a transcript will be available following the call on the company's website. At this time, I would like to turn the conference over to Joseph McGinley, Head of Investor Relations. Please go ahead, sir.

Thank you, Operator, and hello everyone. Welcome to our third quarter 2019 conference call. With me today is our Chief Executive Officer, Ingus Kelly, and our Chief Financial Officer, Pete Newhouse. Before we begin today's call, I would like to remind you that some statements made during this conference call, which are not historical facts, may be forward-looking statements. Forward-looking statements involve risks and uncertainties that may cause actual results or events to differ materially from those expressed or implied in such statements. ERCAP undertakes no obligation other than that imposed by law to publicly update or revise any forward-looking statements to reflect future events, information, or circumstances that arise after this call. Further information concerning issues that could materially affect performance can be found in ERCAP's earnings release dated November 8, 2019. A copy of our earnings release and conference call presentation are available on our website at ercap.com. This call is open to the public and is being webcast simultaneously at aircap.com and will be archived for replay. We will shortly run through our earnings presentation and will allow time at the end for Q&A. As a reminder, I would ask that analysts limit themselves to one question and one follow-up. I will now turn the call over to Ingus Kelly.

Thank you, Joe, and good morning, everyone. Thank you for joining us for our third quarter earnings call. I'm pleased to report another quarter of strong earnings, During the third quarter, AirCap generated $2.01 of earnings per share and net income of $217 million. It is, of course, the platform of AirCap and its people that underpins our success. During the quarter, the AirCap team executed 108 aircraft transactions, made up of 72 lease agreements, 16 aircraft purchases, and 20 aircraft sales. Furthermore, 23 of these transactions were for wide-body aircraft. On the purchases side, we took delivery of nine A320neos, four 787-9s, two E2s, and an A350-900. These aircraft remain the most in-demand variants of their types, which helps us to place them further and further out into the future. The key to AirCap's purchasing and portfolio strategy is to buy aircraft that our customers want, not whatever Boeing and Airbus want to sell. With regard to the MAX, we did not take any deliveries in Q3. Boeing continues to work with the civil aviation authorities to ensure the MAX is safe return to service, and Boeing continues to assume that they will obtain regulatory approval in the fourth quarter of this year. Ultimately, though, the FAA and other regulatory authorities will determine the timing, and we may see variations by jurisdiction. As a reminder, we have taken delivery of only five MAX aircraft to date, and we do not expect to receive any for the remainder of this year. On the sell side, we continue to be active sellers of midlife and older assets. During the quarter, we sold 19 owned aircraft at an average age of 14 years and achieved a gain of sale of 8%. However, much more importantly, what this gain equates to is a premium of almost 30% to the book equity associated with these aircraft. And this is approximately the premium to book equity that AirCap has been earning on aircraft sales for the last 13 years. These sales have resulted in a further reduction in the average age of our portfolio to 6.2 years from 6.6 a year ago, and our average remaining lease term is now 7.5 years up from 7.1 12 months ago. Next Monday, I will go into much more detail at our Capital Markets Day on why we believe AirCap's portfolio strategy over the course of the last 13 years, has consistently created the best fleet in the industry, and today is no exception. On demand, the utilization rate in the quarter for air cap was 99.8%, as demand for our fleet remains high. IATED data shows that RPKs grew 4.5% through the first nine months of this year to September 30th. While these levels are lower than prior years, we believe this growth rate has been impacted by supply side issues. During the summer, thousands of flights were cancelled due to both the max grounding and importantly A320 NEO delays. In summary, this was another strong quarter for AirCap with EPS up 12% year on year. Our consistent growth in earnings and book value per share is the result of our people, processes, procedures and a relentless focus on execution. With that, I will hand it over to Pete before we have the Q&A.