Air Lease (AL) 14th Annual Aircraft Finance & Leasing Conference & Airline One on One Day summary

Strategic approach and asset management

• Focus on acquiring new aircraft directly from OEMs at favorable pricing, holding assets for 8-10 years before selling above book value, and reinvesting capital.

• Operates a $50+ billion platform with 848 aircraft averaging 4.7 years, reducing residual value risk.

• Maintains 100% aircraft utilization and has placed 96% of 1H 2024 order book positions through 2026 on long-term leases.

• Order book is heavily weighted toward A321neo family and includes 307 aircraft from Boeing and Airbus for delivery through 2029, with a $19.9 billion commitment.

• Increased used aircraft sales post-pandemic, with over $1.5 billion in sales expected this year and substantial shareholder returns via dividends.

Industry trends and market dynamics

• Global passenger traffic is projected to grow 13% this year, with record RPKs and ASMs, but airline profits lag due to rising costs.

• Aircraft production delays have led to Airbus and Boeing being sold out through 2030, supporting orderbook value.

• Environmental regulations in Europe are driving demand for newer, more efficient aircraft, impacting fleet composition and costs.

• Aircraft leasing profitability is not correlated with airline profitability; weaker airline margins may boost lease financing demand.

• Aircraft shortages due to OEM delivery delays have increased demand and lease rates, even as interest rates are expected to decline.

Supply chain, production, and backlog

• OEMs have consistently missed ambitious production targets, leading to a backlog of around 15,000 aircraft, equating to a 10-11 year wait.

• Estimated that 25-30% of current aircraft orders will be restructured or canceled, with real backlog closer to 10,000.

• Supplier constraints persist throughout the value chain, with military and defense demand competing for resources.

• Most new aircraft deliveries are scheduled for 2025-2027, with no orders beyond 2028.

• Multi-year aircraft supply constraints are expected to persist for 3-4 years, supporting aircraft values and lease rates.