AerCap Holdings N.V.

Good day and welcome to the Aircap Holdings NV third quarter 2021 financial results. Today's conference is being recorded and a transcript will be available following the call on the company's website. At this time, I'd 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 2021 conference call. With me today is our Chief Executive Officer, Ingus Kelly, and our Chief Financial Officer, Pete Juhasz. 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 risk 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 10, 2021. A copy of the earnings release and conference call presentation are available on our website at ercap.com. This call is open to the public and is webcast simultaneously at aircap.com and will be archived for replay. We will shortly run through 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.

Good morning everyone and thank you for joining us for our third quarter 2021 earnings call. I am pleased to report a strong quarter of earnings with $434 million of net income, or $3.35 of earnings per share. Importantly, the positive trends we observed for the last several quarters relating to operating cash flows, deferral balances, accounts receivable balances, and improving demand for aircraft continued in the third quarter. These positive trends are underpinned by the strong recovery in global air travel. More and more countries are opening their borders to international travel, driven by the huge success of the vaccination program and the subsequent easing of government restrictions. As you will see from the slide, the three key markets of the world are the United States, Europe, and China, which today contribute 50% more flights each day than the rest of the world combined. Since the GCAS announcement in March, travel has rebounded by 38% in these three markets and by 26% in the rest of the world. This is well ahead of our expectations at the time and also shows the potential for further progress in 2022. In the US, we saw a strong rebound beginning in January and this continued through most of the summer with domestic leisure traffic close to 2019 levels. Although there was some temporary softness in traffic in August and September as a result of the Delta variant, most of the US majors that have recently reported highlighted improving booking trends moving into the fourth quarter. In addition, the reopening of the US international market earlier this week should provide a significant boost to long-haul travel demand. it was encouraging to hear from the airlines that booking surged in the days and weeks following the announcement, a clear sign of the pent-up demand that exists. The transatlantic market is the most important long-haul market for both business and leisure, providing healthy yields for airlines and strong demand for wide-body aircraft. The successful reopening of the North Atlantic market will give other airlines and airport operators around the world the confidence to follow. While it's too early to say how quickly business demand will return, this is a critical first step. In Europe, the strong recovery has been sustained by the success of the vaccine rollout and the digital COVID certificate, which has made international travel much easier for airlines, airport operators and travellers. China is the most important market in Asia and has also fared well with high levels of domestic demand. Although there have been periods of turbulence due to regional outbreaks and increased travel restrictions, these have been transient in nature and demand for air travel has bounced back each time, proving the resilience of the Chinese domestic market. As a group, these three markets are back to 85% of total flights relative to 2019 levels. In the rest of the world, South America and India have shown recent signs of improvement. but the one region that has been harder hit is Southeast Asia. Even there, though, we have seen countries like Thailand and Malaysia pivot towards a living with COVID approach, which coupled with the continued rollouts of the vaccine should also spur recovery in this region. Likewise, Australia, which has had one of the strictest quarantine requirements in place since the pandemic began, has started to reopen to international travel. Whilst a full reopening of Australia will take some time, we have already seen evidence of a number of carriers starting to rebuild their domestic networks in advance of greater inbound travel. As an example, Qantas, combined with Jetstar, was operating one return flight per day between Sydney and Melbourne. They moved to 18 return flights the day after the state border opened. and expect to operate 37 by Christmas. This is still well below the 58 per day that was seen pre-pandemic, but a significant step forward nonetheless. Turning to GCAS, we were delighted to announce the closing of the transaction following an extremely successful bond offering and the receipt of all regulatory approvals. And although we only closed the deal last week, there are a number of areas I would like to highlight that have pleasantly surprised me. AirCap has always had a high degree of communication with its customers, but the level of communication and the substance of this communication has intensified materially. AirCap is the most important lessor in the world and simply reaches a much wider base of customers from legacy carriers, LCCs, regional carriers, helicopter operators, freighter operators, wet lessors, and engine leasing customers. Engine leasing in particular provides a new lens into the market. This business runs on much shorter lead times than aircraft leasing, as new business deals are done weeks in advance rather than months and years in advance on the aircraft side. This gives us an important window into the thought process of an airline and their confidence in a recovery if we can see they are prepared to invest large amounts of capital in putting their engines through shop visits and leasing from us to cater for them. The same is true of our interactions with the OEMs, as we are by far the largest owner of commercial aircraft in the world and their biggest customer. I am pleased to see the level of cash we are collecting every day from our customers too. And whilst we are not out of the woods yet when it comes to COVID, I do believe that with further progress on vaccinations, the new treatments announced last week, the transatlantic market reopening, and a pathway out of this in Asia, that it's only a matter of time before the market fully recovers. Now, not only does this transaction provide us with an extremely attractive portfolio of customers, just as importantly, we also gain a group of highly talented colleagues across a variety of functions who will challenge and enhance the AirCap team to ensure we remain the industry leader. It is clear from the level of lease placements, aircraft sales and purchases of both companies that we have the right people and the right products to position AirCap well for the future. Having the right product available to your customers is crucial. And this is why AirCap's fleet will be comprised of 75% new technology aircraft by 2024. These new technology assets such as the A320neo and the 737 MAX, are the most in-demand aircraft in the world, reducing airlines' operating costs and carbon emissions, and helping them to meet their sustainability commitments. Having the most desirable portfolio of assets will ensure that AirCap maintains its global customer footprint and franchise. So in summary, this quarter was an important inflection point for the company. As our strong results demonstrate, AirCap continues to recover from the effects of the COVID-19 pandemic. The GCAS transaction adds a portfolio of well-priced assets and a deeply experienced team of people that will further enhance AirCap's position as the lessor of choice for airlines around the world. With that, I will hand the call over to Pete for a detailed review of our financial performance.