AerCap Holdings N.V.

Today and welcome to the AirCap Holdings NV third quarter 2023 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 the investor relations. Please go ahead.

Thank you, operator. And hello, everyone. Welcome to our third quarter 2023 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 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 October 27, 2023. 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 for joining us for our third quarter 2023 earnings call. I am pleased to report another quarter of strong earnings for AirCap. where the underlying business continues to perform very well, generating adjusted EPS of $2.81, our highest quarterly EPS since the closing of the GCAS acquisition. As a result of this strong performance and an improved outlook for Q4, I am delighted to announce that we are once again increasing our earnings guidance for the year. On a GAAP basis, we generated net income of $1.1 billion in the third quarter, and earnings per share of $4.86. This includes $646 million of proceeds from the settlement of certain insurance claims related to aircraft formally on lease to the Aeroflot Group, which was the result of tremendous efforts made by many teams in AirCap over the course of the last 18 months. I am also pleased to announce another $500 million share repurchase program. This takes total authorizations this year to $2.65 billion, which is equivalent to 18.5% of our market cap at the beginning of the year. This has allowed us to mitigate the impact of the overhang from GE sales and reduce their stake from 45% at the beginning of the year to approximately 14% today. It should be clear from our actions that we see significant value in our stock today and that these repurchases create long-term value for our shareholders. Aviation assets continue to be in high demand, once again reflected in strong levels of activity in the third quarter. Over the last three months, our platform executed 219 transactions across aircraft, engines, and helicopters, comprised of 134 lease agreements, 33 purchases, and 52 sales. Demand from our customers is robust. Our customers are increasingly motivated to lock in Lyft for the years ahead. Of the used aircraft lease agreements signed in the quarter, nearly 80% of them were extensions which is one of the highest extension rates we have ever seen. Remarkably, this was even higher on the widebody side, hitting over 90%. This reflects the ongoing shortage of aircraft, which I'll go into more detail later on. For similar reasons, we also continue to see strong demand for our assets in the sales channel, with many bidders competing for our portfolios. This was reflected in both healthy quarterly sales volumes of $682 million, as well as gains on sale with unlevered margins of 24%. As I've referenced in prior quarters, this is equivalent to the near doubling of the equity held against those assets on a levered basis, compared to where equity is trading in the public market at just over 80% of book. So in essence, during the last quarter, We sold aircraft at almost 200% of their book equity value to expert aircraft buyers and repurchased our book equity at 80% of book value in the public equity market. These gains speak to the deep embedded value in our portfolio and the strength of our book values. Switching to the supply side, you can see from the chart on the left the OEMs are significantly behind the target delivery set in 2018. We have spoken many times about how today's supply demand dynamics, resulting from the max grounding, COVID-19, and more recently production challenges, have led to supplier capacity constraints and in-service reliability. I think it's worth scaling the impact of these supply chain disruptions by taking the most recent Pratt & Whitney announcements as one example. In August, Pratt & Whitney issued a special instruction to operators of GTF-powered A320 aircraft, requiring engine removals for accelerated inspections due to a production quality escape. This, they expect, will lead to an average of 350 aircraft on the ground from 2024 through 2026, peaking at 600 to 650 aircraft in the first half of next year. As shop visit turnaround times remain more elevated than usual, at approximately 250 to 300 days, this will cause significant disruption to both existing Pratt & Whitney operators as well as delaying slot availability for other programs. Putting that peak of 650 aircraft into context, in the first nine months of the year, Airbus delivered 488 commercial aircraft in total, which if that rate continues, would be equal to 650 units. So as a result of these Pratt & Whitney issues, the market will be light on a net basis, hundreds of aircraft, further tightening demand. The Pratt & Whitney team is working around the clock to address these issues, and we are confident they will execute on this, but it will certainly take time. Other manufacturers are also working through their own unique challenges. From an air cap perspective, We continue to run the business for the long term. Today, that is best served by recycling capital from assets into equity. Given the robust demand for our assets, we are able to generate significant amounts of excess capital from operations every quarter, supplemented by sales at significant gains. On the deployment side, we are taking advantage of the GE overhang, as well as general weakness in the stock market to repurchase large blocks of stock at a significant discount to book value. In fact, we have already bought back more stock in 2023 than we did in any other year, both in terms of number of shares and percentage of shares outstanding, which underlines our confidence in the value on offer today. To put numbers on it, those 35.7 million shares were repurchased at an average price of $58.03, a discount of 26% to today's value. The positive impact of these repurchases, as well as the strong underlying performance of the operational business, has led to annualized book value per share growth of 18% over the last six quarters. As many of you will know, our sole focus is on creating long-term value for Aircaps shareholders. So whether it's buying aircraft from the manufacturers, completing sale and leaseback deals with airlines, retiring debt, or repurchasing shares, we will continue to focus our efforts and whatever generates the highest risk-adjusted returns. With book value at $78.28 at the end of Q3, the clear winner today is share repurchases, given these significant discounts. So in summary, AirCap had another very strong quarter. The utilization of our assets continues to improve. Our fleet continues to grow with the addition of new technology aircraft. Our order book is well placed into 2025. and we continue to sell used assets at attractive prices. We ended the quarter with a strong balance sheet as evidenced by our low debt equity ratio and high levels of liquidity. And through our capital allocation strategy, we continue to return capital to shareholders and to generate strong double-digit growth in our book value per share. With that, I'll hand the call over to Pete for a review of the financials. Thank you. Thanks, Gus.