AerCap Holdings N.V.

Good day and welcome to AirCap's fourth 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 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 fourth quarter 2021 conference calls. With me today is our Chief Executive Officer, Ian Gaskelley, and our Chief Financial Officer, Pete Uhass. 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. Aircap 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 March 30th, 2021. A copy of our earnings release and conference call presentation are available on our website at aircap.com and 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 Angus Kelly.

Good morning, everyone, and thank you for joining us for our full-year 2021 earnings call. I am pleased to report full-year earnings of $8.68 per share. excluding transaction related expenses 2021 was a milestone year for aircap as we closed the gcast transaction on november 1st this transaction significantly enhanced and diversified our business broadened our customer base and geographic reach increased our product offering and added outstanding new talent the combination of which will lead to increased revenues earnings and cash flows for years to come. This, along with the continued recovery in air travel in many parts of the world, puts air cap on a positive trajectory heading into 2022. Now, before we talk about air cap and the year ahead, I do want to address the tragic events unfolding daily in Ukraine. Like all of you, our thoughts are with the people of Ukraine. More important than any potential financial impact is the clear and very serious humanitarian crisis taking place in that country, which is impacting the lives of millions of innocent people. Our hope is for a peaceful resolution as soon as possible. As a result of the far-reaching sanctions against Russia imposed by various governments, aircraft lessors which have operations through the EU, US and various other countries are prohibited from supplying aircraft and aircraft components to Russia. In compliance with these sanctions, Aircap has terminated all aircraft and engine leases we had entered into with Russian entities and will fully comply with these sanctions. Prior to these sanctions being introduced, Aircap had 135 owned aircraft as well as 14 engines on lease to Russian airlines. We had no helicopters on lease to Russian airlines. This represented approximately 5% of our fleet value. As you would expect, we have taken aggressive steps to recover these assets and so far have repossessed 22 aircraft and three engines from Russia. In addition, we had seven aircraft on lease in Ukraine and five of those have been recovered. We had zero aircraft in Belarus. Let me add that our lessees are required to provide insurance coverage with respect to leased aircraft, and we are insured under those policies in the event of a total loss of an aircraft. We also purchase insurance which provides us with coverage when our aircraft or engines are not subject to a lease or where they are subject to a lease, but a lessee's policy fails to indemnify us. We intend to vigorously pursue all of our claims under these policies with respect to our assets leased to Russian Airlines, as well as all other legal remedies that may be available to us. Away from events in Russia, it's important to highlight the strength of AirCap and how the overall aviation leasing environment has improved in the last 12 months, driven by the reopening of markets in Europe and the U.S., with more expected to come in Asia throughout the year. I also want to update you on the GCAS transaction and highlight the diversification our enlarged business benefits from and also how our customer interaction has changed since the closing of the transaction. On the integration front, I am pleased to report that we have made tremendous progress. We have filled all of the senior leadership positions and I am pleased to welcome several new members to our management team who bring with them a wealth of knowledge and experience I would like to acknowledge the work that has been done to integrate the two companies so seamlessly and to make a special mention to all of our new colleagues who have integrated so well into the AirCap team, many of whom have changed locations or roles at what was an uncertain time. I thank them for their hard work and dedication. Without such a seamless transition, we would not have been able to sign 158 lease agreements as well as 72 asset sales and purchases in the fourth quarter alone. No other leasing company comes close to this level of execution. This record level of activity shows that we hit the ground running just like we did eight years ago, and it is the demonstrable proof of the efficiency and the effectiveness of our integration process. Another important feature of the acquisition of GCAS has been the addition of four new areas of focus for the company. Engines, cargo, helicopters, and materials. Each have distinct benefits and synergies that add to the overall air cap value proposition and offer new lines of revenues and opportunities to support our customers. What I have noticed in particular in the five months that we've now been a combined company is that the level of customer engagement has really stepped up, and that we are in a position to provide solutions to airlines and manufacturers which no one else in the world can. Our two engine leasing businesses have performed well and provide us with a broader reach into our airline customers, significant optionality in how to manage older aircraft, and valuable revenue diversification. Our 100% owned engine leasing business is comprised almost entirely of General Electric and CFM engines. These are the most liquid engine types that power the world's most popular and in-demand aircraft, including the Airbus A320neo, Boeing 737 MAX, 737NG, Airbus A320, Boeing 787, and Boeing 777-300ER aircraft. Our engine leasing business has deep relationships with two key OEMs GE Aviation and CFM International, known as CFMI. Some of you may know, and others may not, that CFMI is a joint venture between General Electric and Safran. This joint venture was established almost 50 years ago and it produces every engine that powers the 737 family, the 737 MAX family, 50% of all A320s, and 50% of all A320 NEO family aircraft. A key part of the CFMI joint venture is its spare engine leasing business known as SES. As part of the GCAS deal, AirCap took over GE's 50% share of SES and signed a 20 year agreement with Safran regarding SES. Engine lease utilization continued to increase through 2021. as a result of strong demand for spare engines. This demand is driven by increased engine utilization, information AirCap has access to on a daily basis. And it is clear from our data that many airlines continue to delay investment in new engines and shop visits as a way to preserve cash. This has helped demand for our short-term leasing product, as well as demand for spare parts, in our materials business for refurbishments. As long-haul travel continues to reopen, in Asia in particular, I would expect to see further demand for this product in the year ahead. Moving on to the cargo business, where we are the leader, we have observed structural increase in the demand for cargo aircraft, driven by the rise in e-commerce and global supply chain issues. Due to this structural change, GCAS, which has been a global leader in cargo leasing, for 20 plus years, invested in a joint venture conversion program for the 777-300ER with our partner, Israel Aerospace Industries, known as IAI. This joint venture is called the Big Twin Freighter Program, which involves the conversion of the Boeing 777-300ER aircraft into long-haul, large-capacity freighters. This is the latest in a series of partnerships with IAI dating back over 20 years, which includes the conversion of the Boeing 737-300, 400, as well as 767-300s. We see strong demand for this program and we have a clear first mover advantage as GCAS and IAI launched this JV in 2019. Airlines are attracted by the strong unit economics of the aircraft and the excellent payload range performance. Given where commodity prices are, I expect further demand to come in the year ahead as operators switch from four engine aircraft like the 747. On the helicopter side, we observed improving demand throughout the second half of 2021. The movement in commodity prices has provided a further tailwind for demand since the beginning of 2022. This, combined with tighter OEM supply in the last number of years, has helped firm up lease rates and demand. I was able to see this level of interest and enthusiasm firsthand when I attended the Heli Expo event in Dallas, Texas earlier this month, and I am confident this sector will further strengthen in 2022. The expansion into new utility missions has also been a positive driver for helicopter demand. Two examples would be defense, where one of our larger customers provides support to the U.S. Navy, and search and rescue, which includes the growing area of aerial firefighting. Given recent events, it is likely that energy independence is going to be an ongoing theme for the foreseeable future, and our helicopter business will help to support this trend with various new campaigns underway. So with the stronger macro backdrop, wider mission capability, and tighter supply, the business is well positioned to capitalize on increased demand. Now turning to passenger aircraft, we continue to see a robust improvement in demand as COVID restrictions around the world are unwound. For example, domestic travel in Indonesia, Thailand, the Philippines, Malaysia and Vietnam is already back to approximately 80% of 2019 levels, which is around 30,000 flights a week. In contrast, however, international travel in those countries remains low, at only 17% of 2019 levels, or 2,300 flights per week. So there is plenty of room for growth there as restrictions ease, which will feed into future wide-body demand. Now, turning to the impact of higher oil, certainly in the short term, it is clear that the pent-up demand for air travel is extremely strong, given two years of lockdowns around the world, coupled with high levels of household savings. If higher commodity prices persist, we will have to see what impact they have. But please bear in mind, the industry was able to cope with $100 oil between February 2011 and September 2014. Airlines in Europe benefit from higher average fuel hedging than their North American counterparts. And recent statements from the airlines suggest they are confident that they can pass through higher oil prices as yields remain strong. One recent example, was that Delta had their highest ever day of sales despite being at approximately 80% of 2019 capacity. So what we can clearly see on a global basis is that the propensity to travel has not diminished and that the industry has proven itself to a higher oil prices even following the financial crisis. We have every confidence that it will do so again this year. In summary, the integration of GCAS has been extremely successful as demonstrated by the level of deal activity, 230 deals in 90 days, which is unprecedented for the industry. In 2021, AirCap generated tremendous earnings of over $8 per share in adverse circumstances and executed the largest M&A deal in the industry's history. As we look forward, the rebound in demand for air travel and our strong balance sheet, allied to the benefits of the GCAS transaction, sets AirCap up for many years to come. I'll now hand the call over to Pete for a review of the financials.