AerCap Holdings N.V.

Good day and welcome to the AIRCAP's fourth quarter and full year 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 full year 2019 conference call. With me today is our Chief Executive Officer, Ingus Kelly. and our Chief Financial Officer, Pete Duhass. 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. RCAP 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 Aircap's earnings release dated February 13, 2020. A copy of the earnings release and conference call presentation are available on our website at aircap.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 thank you for joining us for our fourth quarter 2019 earnings call. I am delighted to report record earnings per share of $8.43. In the fourth quarter, Aircap generated $2.34 of earnings per share, a 44% increase over Q4 2018, continuing our long track record of consistent earnings growth. During the year, the AirCap team executed 353 aircraft transactions, which included 192 lease agreements, 65 aircraft purchases, and the sale of 96 midlife and older aircraft. This unmatched scale of activity demonstrates the breadth and depth of AirCap's relationships with airlines, manufacturers, and investors around the world. We enter 2020 in a position of strength. We have $40 billion of contracted future lease rents. For the next three years, over 97% of our lease rents are already contracted. Our average lease does not expire until the third quarter of 2027. All of this gives us tremendous visibility into our future cash flows. Moreover, today, new technology aircraft make up 58% of our fleet. That is the highest percentage of new technology aircraft of any major lessor in the world. AirCap has taken delivery of more new technology aircraft than any other aircraft or airline in the world. As a result, AirCap is helping its customers meet their environmental and sustainability objectives. Our new technology fleet today is concentrated on the most in-demand variants, the A320neo, the A321neo, the Boeing 787-9, and the A350-900. The average age of our new technology aircraft is approximately two years. and we know that these aircraft will form the core of the world's passenger fleet for decades to come. Our current technology fleet is also concentrated on the most liquid aircraft types, the Boeing 737NG, the A320CO, and among the white bodies, the A330 and 777, which remain the mainstay of global long-haul routes. But very importantly, The average age of our current technology fleet is 11.3 years, with our 777 fleet being over 13 years. You can see this in the slide in the deck. We do not have young current technology aircraft because we have focused all of our new orders for the last decade on new technology aircraft. We know that over the next decade, current technology aircraft will be in demand, but will gradually become less so as proportion of new technology equipment grows. Given the average age of our current technology aircraft, AirCap is the best positioned of any major lessor for this trend, and we have clearly been positioning the company for the last seven years with this in mind. This is one of the key competitive advantages of our capabilities and scale. AirCap sees trends before anyone else, and crucially, we act on these trends. During 2019, we continued to actively manage our fleet by purchasing new technology aircraft and selling our mid-life and older assets. In the fourth quarter of 2019, we took delivery of 14 A320 Neos, two 787-9s, four Embraer E2s, and a 350-900. We also sold 28 of our owned aircraft. For the full year, we sold 88 owned aircraft that had an average age of 15 years. We sold these aircraft for an average gain in sale of 10% over our carrying value This represents a 35% premium to their book equity value. These sales have resulted in a further reduction in the average age of our portfolio to 6.1 years and an increase in our average remaining lease term to 7.5 years, which is one of the longest in the industry. Furthermore, these sales allow us to recycle capital into more accretive opportunities. Turning to the coronavirus, it is, of course, affecting our Chinese customers, their staff, families, and our own employees in China. And our thoughts are with those who are suffering from the impact of the coronavirus. These airlines have been our partners for decades, and they will be our partners for decades to come. We will help them where we can through this very challenging period. In terms of Aircap's exposure to Chinese customers, approximately two-thirds of our revenue comes from the big three state-owned carriers. As with prior epidemics and given the efforts of the Chinese state, we do expect that traffic will return to normal later in the year. On the MAX, we did not take any deliveries in Q4 and we await further information from the FAA and Boeing with regard to the safe re-entry of the aircraft into service. Boeing currently estimates that the MAX will return to service in mid-2020. On demand, Our utilization rate in the quarter was 99.8%, as demand for our aircraft remains high. No doubt the max delays to the coronavirus will impact RPK growth in the short term, but we expect that over time these issues will be resolved. At our Capital Markets Day in November, we mentioned that large sales of stock and stock options on aircraft stock by two legacy shareholders, AIG and Waha, led to elevated volatility in our share price over the past several years. Second of these shareholders, Waha Capital, completely exited its position in early December, which removes an overhang on our stock. Going forward, we would hope to see a greater correlation between the consistent performance of our business and the market value of our company. We will, of course, continue to take advantage of that mismatch if it persists, and we announced a further $250 million share repurchase program today. In summary, this is another strong quarter for AirCap. with Q4 2019 EPS up 44% over Q4 2018. Our consistent growth in earnings is the result of our platform, our processes, and our relentless focus on execution. We will continue to manage this company to deliver long-term value for our investors as we look to the decade ahead. With that, I will hand it over to Pete for a detailed review of our results.