Aircastle (AYR) 12 Feb 192018 Q4 Earnings call transcript

Good day, and welcome to the Aircastle Q4 2018 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Frank Constantinople, SVP, Investor Relations.

Thank you, Espe. welcome Earnings Limited's Call. and Full Quarter everyone, XXXX Year morning, to Fourth Aircastle and Good Kriedberg, With Executive Chief Mike Officer; today Aaron Commercial me are Dahlke, Financial Mike Officer; Inglese, Chief Chief Officer. and this through presentation. shortly, press presentation release the a like everyone recorded, the begin at call be www.aircastle.com, but being available We'll is will earnings PowerPoint website to and I'd remind our that our replay with and along may which would deemed like out point not forward-looking be I facts that statements statements. are historical today, to results may our from SEC to our expectations materially website. cause facts differ expressed Limited's in the in on results expectations Actual that filings, estimates which those differ actual certain Aircastle detailed or materially can from statements, also and are found could be you the Limited's direct to legend. statement for forward-looking release earnings full Aircastle I'll over now we'll the And turn Mike Inglese. to call

going morning, the fourth to strategy our view financial the current quarter market I'm Thanks, open conditions, year, results year, which it cover years. and Frank. then we'll for Today, coming our to our to up Aaron after Good for Dahlke the over the to Q&A. I'll on discuss and our everyone. the results call for turn

thesis. summarizing by me Let start Aircastle's investment

to critical accretive with flow and thesis. market a conditions that share to air opportunistic investors traffic remains very long-term opportunities dividend, growth strong, throughout on Our industry is solid for it up our aircraft as an focused balance asset value and us Being opportunistically fleet and and demand capital balanced element allocation a act solid also liquidity very outpace sheet conservative cash majority Globally, make adept disciplined leasing cycle, approach investment aircraft the fundamentals, the ample fleet. to growth Aircastle's to on a profitable includes and change. shareholders global is the strong growth. particularly and significantly has modern while bit to remains in manager We're of slowed continues towards XXXX, find enable executing in GDP able creation repurchases our narrow-body growth. for

industry over current is XXX more acquired equity, billion milestone invested $X which billion with shareholders' fourth and quarter. move our sold aircraft In our we year. we the generating can other very differentiates effectively have team closed fourth capital the credit our was around strong and ratings awarded active is very and with for first for aircraft since achieved of us than seasoned globe. at of of a closing billion over We significant for quarter, the in believe a fourth in the a the We to gains veterans aircraft this a $X.X Moody's. in from we've This half billion, were We $XX history, the shareholders of during the S&P, XXX time many quarter, year. platforms. little $X We that technology year-end. And XXXX assets the million. returned $XXX milestones over XX new by first over formation, investment-grade We've of $X over crossing Fitch approximately billion AXXXneos.

fleet extended year, $XXX for aircraft income acquired with billion per or the $XXX the the During of $X.X in share transitioned $X.XX during or and We XX X per we XX million year diluted earned share. leases $X.XX adjusted million and on aircraft net the others.

$XX share about we million our about million and a of including professional of as leasing capital, all dividend year, X year, the $XXX proceeds repurchases. indications strength million for managers during of stewards aircraft XX sold of platform. responsible and returned the with skilled asset in $XX million, of during wide-bodies $XXX to total And net also shareholders We including

a a little Our above was cash with XX.X% GAAP year solid ROE for XX%. ROE the

X term older The lease of $XX during average weighted the sold acquired we aircraft X.X quarter quarter, and million gain million $X net the proceeds of XX of for aircraft X.X During weighted XX age a years. was million. remaining a fourth for the average with aircraft acquired and of $XXX years

during in mid-aged invest year, Our continued aircraft. as we fleet continued the transformation to narrow-body

aircraft of Our by and the value, fleet end book total are XXX X AXXXs, at years compares of of the the ago. the the Wide-bodies XX% twice this represented value, book owned reached aircraft those and which of of XXXX. X/X XX% are of at end of to XX% peak narrow-bodies of year net percentage

As manageable book fleet. value placement of represents net percentage today, the is task very XXXX of our our of and a small

a in tried we as spend importance our press Brazil Town me to of well as system. Convention the situation release let predictable a on few Cape Brazil. to underscore week, In judicial having the minutes Now last the

market of to be order, lease payments. With the other of and with expect be X. our get maintenance Although to closely we'll stay aircraft have continue new-generation the receiving the the Cape after with on due repossession mid-April, stay we're be develop of proactively and on aircraft. monitoring contravention view, and cautious Until law February properly we bankruptcy confident them until with and quick be us he extended to in the we a variety side the a falling rent have gives to back. SCs, we're on after believe right This our must and of campaigns then, the for very in We that remain fact. the Town, operators that aircraft period potential within lessors and paid did require appealed judge these that our asset maintained this time everything reasonably we Embraer ongoing we'll EX respect We've optimism. working for assets

generation We these scheduled market next this with Boeing, believe regional are market their and the of second half year with be to first we the XXXX. coming Embraer not assets. of Our until -- the now in develop as in into deliveries and new put the will able conjunction helps for aircraft partnership

estimates. by business environment. global X.X% the full above multiple IMF's growth turning remain favorably of traffic as in for resulting The Now line GDP load traffic reaching the high most GDP level approximately estimate again, at of Full year traffic IATA of recent factors the growth represents record in air growth evidenced traffic continued of XX%. was, grows results the air of year. strong Global It estimated year with to almost compares by a with current full fundamentals year, for the as X.Xx. capacity Market for of air XXXX. the X.X% IATA passenger a X.X%,

remain X from global industry's While the year. XXXX traffic was of airline exceeded by below billion for end $XX a rental prior the the years above rates current trend-line growth. level low was peak for average the represented profits strong $XX healthy, consecutive off profits exceeded year a $XX oil to be fuel that bit IATA, industry October to fourth At prices below forecast, In barrel This back of was standards. 'XX, IATA XX% when XXXX airline a narrow-bodies stable. about and it the peak IMF According the a volatile, seen loss decade billion. X and January According fuel airline $XX.X have airline to of XXXX profits IATA, years. the the industry's reported of 'XX, market. can the net the prices $XX since income over latest the generation forecasting XX% XX% benefited remains and to to profitability, almost Low a fuel is occurred year just billion. the Switching remain below historic to XXXX past below XXXX cumulative the prices well of peak, cost projected be billion. Demand rise for 'XX ago. are leasing XX% while the has

traffic availability pointing relatively financing due their oil as higher growth, and rates As we've for affordability low the transition out in the NGs low low traffic continued operator-based and financing and supported and growth supply-demand in investing ample Strong attractiveness by to values, past interest with supported aircraft enhancing marketplace. and over second aircraft. been X and demand years, With costs been for interest as have lease remains demand wide-bodies CEOs of current narrow situation prices the availability respect rates. have soft, the to the well prices

Although was average at X-year at interest of below low at the well end fuel, rates on treasury increased a XXXX. and this XXX still between remain XXX XXXX the X.X% XXXX from light but they during up year-end, XXXX, historic basis.

widened Towards rate signaled taken has the end bit, but conditions would accommodative spread banks of policy monetary and central ECB fed a prior recently since have the last more been credit remain on tightened, year, its hike path U.S. financial The a year-end. accommodative. pause

ever Looking near-term the remain ahead, prospects, of and mindful optimistic we while events. about current being trends

results strong our conservative to XXXX be we a new our strength. be a disciplined play highly market, achieved competitive to to expect able in that to investments, finding in by growing while and continue selective In manner. profitable We situations competitive in

$X.XX March is of our is that of our narrow-body the deep with We've from source team a capitalized large XXXX, strategy, investment-grade have space, In XXXX, The past professionals, the proactively not towards quality board per improved -- experienced, Since liquid We an the demand allocate it to by aircraft. Aircastle payable had stewards per is tied a conservative to our create capital of more our cornerstone $X.XX and we and of issue quarter patient flexibility, closing, and XX. long-term capital regular can commitments. of responsible largest providing of dividend, our Aircastle's with capital first shift We've react building seasoned we capital, and advantage value. dividend we aircraft Xx, these and earning approach we'll attractive long-term leverage plus developments on a to rating. structure quickly the profitability to returns discipline down to is share over significant attract quarterly we our while few successful shares conscious investment-grade the manage the X.X%. permanently $X.XX approved portfolio. years, have to opportunities very a XXst in towards and investor of remain Consistent aspect mid-aged as a and liquidity, philosophy and credit continue Brazil. conservative yield investment-grade in and currently flexibility conditions, foremost, market we our increased and team take to fleet opportunities, tripling substantially per a allows are share on Our credit an notwithstanding about we've shareholders, the value. rating. of we return dividend continue with financial investment and to Combination with And share. consecutive believe per us improved

call the Aaron, who'll year. the to results the I'll Now review and over for turn quarter the

Mike. Thanks,

of another Mike financial operational As and we had earlier, strong stated year performance.

narrow-body XX exposure assets continue per in we $X.XX for or net acquired million and million For $XXX and reduce per resulted increased further aircraft or at $XXX net $X.X XXXX earnings our XX%. XXXX diluted what adjusted assets. earned felt million in share. We the sold This of full a to healthy billion higher-risk our and remaining-in diluted of to profit. $XXX in of share, income year, fleet base growth we $X.XX are We sustainable

Let me review the financial results.

increase primarily XX% sales margin revenues due well X%. into rental for largely driven is and million revenue of XXX the $XX net margin rough of XXX equipment This fleet growth. of approximately by $XX $XXX million, and fourth for quarter, a sales or the from million quarter were maintenance proceeds million recorded were early to is For in leases to end $XX a higher lease from sale an higher XX% and up the of year-over-year, million $XX X% XXXX in of the which revenues million. $XX million $XXX Brazil. due The quarter rental termination fourth net aircraft We finance up a own $XXX translates maintenance aircraft the Total and finance at million, We XX $X were increase lease XX% of aircraft the from or year, Total gain year. previous historical revenue aircraft of impact in earlier. of lease of full revenues of year year-to-date. our our million. Avianca with above XXXX, on was the lease This flight the

of million year, driven revenues finance $XX revenue for $XX $XX higher million. full the year. maintenance rental lease $XX Depreciation and fleet and was million depreciation the primarily million For increased revenue due $XX increase net million was of The or total higher the in lease for and X% quarter higher to by higher growth.

billion we've from two past $X.X XX, the and years, XXX increase to and -- net book value aircraft acquired XX XX have grew for net Over billion. sold $X.X a aircraft of

that our included fees a XXXX earnings $X notes was of million portfolio. average expense. joint the $X ventures $XXX to December. million and In in reported September $X million quarter, year. controlling JV million We unsecured fourth Full of maturing to than the a year. balance. termination were expense compared prior exit associated in $XXX assets with notes investment is the higher net $XXX loss the our a interest pursuing disposition larger million due million to of year $XX expense equity quarter on expense by full Interest a million the to its in For for $X of interest loan investment for We partner, decided interest unconsolidated and repaid due the XXXX, Lancaster, the and previous declined issued year was in in as JV debt million as

we the is recognized highlight a disposition XX% the on fourth nearly expect portfolio. to important related purposes, the losses we since the JV loss million to inception. share $X that investment on to earn in quarter undistributed accounting our IRR impact, It of this For of despite accounting our

our the mainly reflects was taxes. $XX million up year-over-year. adjusted $XX by $X million $XXX partially and respectively, total $XX earnings revenues million million, in was net both million and The offset $XXX of Lancaster higher million, expense for income million higher $X For from in change increase of $XX net higher decrease of and quarter, million, income $XX investment JV depreciation, interest million,

impairments Net income income the in quarter last income to $XXX $XXX due million We XXXX XXXX for of maintenance the was in no was higher impairments fourth of income adjusted million. XXXX, XXXX while $XX million net million was versus $XX For and $XXX was million. $XX versus had the EBITDA of second in $XXX XXXX. than revenues full was in adjusted net higher of quarter million net year, million year higher. Adjusted $XXX million

rose million $XX Maintenance gains For were million the XXX -- higher partially million. rental These to million flight manage value own fourth we ventures. XXX end the book net a of $XX lease $X.X of full finance $XXX and value aircraft XX including with the of by At million a million X% We through in to book XXX revenues equipment. billion, with revenues billion. EBITDA of quarter, year, with adjusted were of sale $XXX of higher. offset aircraft from a book lower net aircraft unencumbered value and joint were net increases $X.X $XX lease $XXX our

mostly and quarter primarily net was fourth XX.X%, portfolio yield net due lease our XXXX, with was margin XX.X% For ROE the X.X%. of margin revenue, lease was the Avianca aircraft was rental was The for cash XX cash XXXX versus and interest was ROE XX.X%. by lower to -- X.X% cash lease our driven Brazil. termination lower of GAAP interest

be interest to coming Given the expect the the margin XXXX out half it transition by cash year-end. of will around net but we we the second anticipate aircraft to of of half in first a down year recover X% on the time expected Avianca, bit,

X.XX%. very Our debt liquidity and The year-end, more of debt cash strong. average unused than our capacity. million of at was were $XXX coupon Total of we $X.X had billion, $X borrowings year-end million position debt. XX% remains on total including $XXX weighted billion At of or unsecured revolver unrestricted

we flow forward liquidity, buying leverage, maturity was million, debt-to-equity dislocation, to credit lead operations positioned of financial potential could take debt our attractive minimal X.Xx. average any are With well which $XXX commitments, weighted and X% Our ratio from investment-grade opportunities. to rating X.X net was increase. market low Cash years, and year-over-year was advantage significant

remains balanced. approach Our capital allocation

of increased in have our and XXXX million acquired $X.X repurchases. for going repurchased of Xx approximately Since dividend allocating our XXXX per We've shareholders, public $XX X, also alone. in of February we XXX billion approved share year, $X.XX million common can billion share million the capital efficiently On common and out per shareholders $X.XX quarter. currently payable now a and tripling in dividends million $XX.XX share of which to at cost form payout since we the aircraft dividend share, use to XX. we opportunistically shares returned balance our remain to XXXX, the $X.XX we $XXX in remaining to dividend the since $XXX and investments the repurchase authorization, During March paid average between have to We've of capital from per on including an $X.X program with million. the $XX shareholders. share We and a committed board return accretive XXXX, totaling

quarter press XXXX, guidance commitments of closed I'd Thus have presentation, earnings find X both the have the website provide to elements we to on first to can for in narrow-body morning. XXXX our guidance. aircraft $XXX which far, of have that were and committed earnings posted some context and You release million. like background for in close this or --

reflects finance For a the year, we not rental impact the quarter are combined and lease, in over generating the This past $XXX aircraft. our revenue, are of of and activities million aircraft findings million, the along XXXX. including the lease $XXX net sales -- between $XXX to of guiding presently compare Avianca XX to volume would and the first with million which revenue transition first quarter, that acquisition

scheduled roughly 'XX, Our sequential revenue QX maintenance is quarter but expected in flat a the year-to-year, down first for basis. to on on based transitions be materially

maintenance aircraft reduce ROE XX and capital associated XXXX gains was selling Brazil. our We franchise achieved We produce significant of AXXXneos year fourth and by including shareholders. strong includes returned value risk. XX strengthened narrow-bodies, strong to residual and to acquiring and a financial the profitably performance XX solid the quarter conclusion, with termination explained, of results. further exceptionally sizable As Avianca revenue In XXXX of with leases

position, We conservative, commitments Q&A. and for access have operator, a flexible future is steady strong to modest, remain ratings, open we're capital have credit we up and and with call liquidity with our the our robust capital investment-grade that, And and the happy structure to financing.

Cowen Becker take And Instructions]. question Helane we'll with and [Operator from our first Company.

Just a couple clarification of questions.

On we with the the any changes finance that? between do about differences the think accounting and lease have associated to lease, rent

a as You're talking new leasing the standard? result of

Exactly.

on No, don't have material that business to we impact reporting. any expect our

about considering with were were my Okay. Lancaster Are partnership. then you I something Are with guess, said would that selling the they discuss do? joint -- respect ventures is question that other little is, you assets talking acquiring maybe in those leaving associated writing Or you to to And a that, the assets? they giving that. detail? want you that you not that Can just more

It of and considered, more the those Helane. management stewardship third-party we something have. in is we would context offer believe, market, Sure, the the but will them probably we the than value of assets,

party. likely And that so to will third that it's a occur sale

my in And Okay. just of seeing. last then what question, terms you're

kind geographic you Is a that I seeing different that there to if think could than region demand, about? one that? bit bend be were really that might there wondering Mike, and you maybe is you said, a region stronger strong of a I'm little just talk

-- purchase selling. Europe, seeing a the We're much lot seeing board. on still It's across It's you're a leasebacks. I it the and you're of in lessor Mike it in Kriedberg. say No, those board Asia. across I of finding it's number wouldn't mean, pretty

found decent shortage opportunity. of haven't finding we So any

I pretty Yes, across board. it's think, I So region. a pick wouldn't the specific

Capital. with Susan from Donofrio we'll our next take And Macquarie question

India is flag, just couple the if some to follow-ups I is, Avianca. general. on mind, Is markets is, there bit can And then Just and have I about of that questions. you for? interest talk be rates? something And should a coming obviously, a One rising we to guess, in anything there little watching emerging

in it's I would clear a anymore. we're environment rising not interest Yes, first, that say, rate

keeping obviously, middle that. rates we're, dollar, an in last So both effects oil. strengthening see on the and of year eye We did the from rising

very with of of industry. a last year market And we what respect to would that bit competitive has of to has say, those down come clearly a airline that the the a -- middle I from market, three it's and India, amplitude in very it's the of modulation were Some growth in seeing respect strong for sort phenomenon.

have is We last lease handful investments have the enhanced of other our relationship half with them, in in leasebacks with of and first year during on second our with which with sale AXXXneos through AXXXceos addition them. a our IndiGo to investment we

to exposure and GoAir well. also SpiceJet, Airways to there We to Jet as have

think so we it's news forward. path -- but path, a to of to we all a So won't that not they Jet that will we allow over appears to no coming continue but monitor yet With growth smooth done them the It's respect Airways, market. see it the months. to which details be of expect situation. declare accommodate that works ready one's the It victory, appears related the that to growth, and strong going in perfectly have definitive right be plan, recapitalization more to might on to and course and move it we some the a

Great. then Avianca. on just And

would listen get would the to you think, the So next trying in of higher about replace to can a court is them. order guess, be I back that when I'm -- your just -- aircraft timing step

creditors bankruptcy the them judge's until stay mid-April -- the under their stay, being scheduled. has he meeting a when given So

take will the think the this decision expect point half answer I we with have that We first time, in clarity or any have appeals an time. probably probably until that mid-March court. process don't would to process at That from some appealed and or

Jamie question from next with our Baker take we'll JPMorgan. And

a something and nicely in market? with understand had there was Mark about so place? the reserves, the maybe aircraft were are the why So first Brazil was Or we maybe trying Should to many I above it you leases simply Avianca alone seems ACG avoiding this your regard, situation not and exposure have it that failed know but -- in. currently about you're GE that that they're you? there, I that in that thinking the and others you're underwriting case I'm assume

whole morass be? this came color So how any to on

any GECAS priced of don't scaled the basically idea is cover So underwriting. appropriately the reserves. rates. appropriately are of yes, had We dismiss that lease we premise let whole We And and question. in shape maintenance sort better ACG somehow had We than your me preposterous.

get relatively I strong very So them these and credit. long-term lease quickly, on leases on to them a back, young to expect expecting I'm new are with have AXXXs.

when? you a also one-off may in need to jurisdictions there to rethinking write disregard Is this Or a just down? previously Town, seems how And be like so, pretty what risk are held you given about might possibly aircraft weaker situation? operators with have them place that if for And is a Cape you blatant where Cape Town up?

look, -- watching what world happens is So Town Cape plays in how Brazil, everyone the certainly, out. and

that are goes, will influence So and certainly we the think think into certainly, and about convention how how watching business. upon risk about that interest pricing with we future this keen we depending how it

Vincent question with our take we'll next Caintic from Stephens. And

of Just couple a detailed questions. kind follow-up of

the on million equity earnings loss with in first method So $XX the investment.

million, then, joint that potential upside implications gains portfolio? venture go you it So there'll $XX to $X just $X then that I And wondering to a the the understand of that so, assets that million? first any I'm that million on your existing you're driving the a through on off, in there's that is there seeing get as be other JV reason in If versus portfolio? And the million other terms $X the the on if the loss ventures? what's is work portfolio? Lancaster. from of the mark-to-market to any And

Aaron. It's

venture, about will the And $XX in so is purposes. so has it's or loss. change think you the XXXX, that on that's the million, gross a So joint a the to there work on change gains portfolio the accounting math for be way just when value,

that different retired made and about capital on holistically, if if I and venture exit used own that have own aircraft-leasing this with venture -- joint think them this and a of sectors, a their about investment the nice venture this controlling of reallocating assets both look equation, it in our the with at in is the people have this Aircastle's shareholder think in they you very to return But sorry, us space, these who totality they to of decision since When into their context by established there. stock sides establish you think joint us.

So expect of we're them, a sort think portfolio to own is mandates, we with the in implications see for and time. in of seeing context of necessarily progression we over change don't of the our values logical the personnel this or how it has change any vertical what and

remind today, return I'd And for us going say in this. of in, inception, return it XX% you're just -- like to gains in you, excess to like to coming on to and on XXXX is see be going since

That's Got really it. helpful.

Avianca Next, on Brazil. the situation with

it ordered I So for -- -- want payments one just repossess actually them court how the typically in thing once these what events, our does lease you receiving February assume to X? then, And 'XX, turn long play you -- how long since does does are the clarify, of that thinking the guidance first that from it for prior aircraft, quarter monthly out? then And types kind long around? term to it how experience of your from take --

be with and and of recovery a if where seen acceptable we plan April. the where that the both month to received you payments X be will since judge's on or our it stipulated context fact, process the February of the of this in appeals in in new have to remains and will the find leases, fact be, reserves. of a others middle date resumption how rent the In we when So plays order, out, there context bankruptcy get maintenance in -- creditors

expectation lease expect able to short back to I'm get stronger time, be a my personal be relatively I period mid-April, sometime my a I will So what them guessing few of on getting leases with aircraft months, is, be a we relatively after back after long-term credit. and out should on

our take Mike next we'll from Bank. with And Deutsche question Linenberg

a -- here, so I just to dead to want beat but to be I clear. Avianca. horse not Mike, back

know and two, you said that others. did -- they are Number can everything them to don't Number is continue was they curious those make continue maintenance I But that if reserves the now they they back, -- you dynamic. airplanes? they you, Avianca payments, even in about just So actually there? Brazil, Then current? whole how one. a Can rear they are a have are take you out? one many months. receive those going so say have you Do have perform, and -- rent recently from keep few to I I'm

okay. That's

no, with X. usage it they the on current. get to began assets He them order of all them for are February did The So not the ordered as judge current. the not pay to lessors

is still years lessors significant Brazil and. So the the across Avianca in there all family

As will relates it judge don't us to a developing but the on few see of month it to how it's our keep the we situation, believe process well authority going-forward there, cramdown that on next need we course tell as over recuperation we plan. the appeal of as the the the the months leases and next progresses us and situation, has the them in to context

that's then Okay. as apparently, XX about I just and you get Avianca for found Airbus believe, AXXX And looks Brazil? -- does them. mean that What flying is talked that already pastures? the press on about out, the able and Or gone the to that you were AXXX? then narrow-bodies, homes a in you've release, greener like the repossess It to repossessing with actually you've So still follow-up.

So yes, and not exactly.

possession, original the it. is was The place. repossess and bankruptcy we in fact are our in bankruptcy AXXX in the So we stay -- remarketing process put the before did of aircraft the in

for that. but greener not confident yet the a find have yet. and will it, It's quite a we're we'll basically identified, been find pasture hasn't AXXX, we a XXXX home for we home So

a to Okay. it bit and their Jamie's that did different, know this down. we is the Aviation, don't sometimes And only that kind airplanes every to out, BOC have realize your you little and X, XX, track a them they follow-up question get of is planes trying so engines, of I is maybe and situation then just last was now, had

and had the first first-mover they and another So because move BOC? what on Avianca situation a to what Or were with had you out move get so, less-complex and had worked able advantage? to carrier? Did than they with Brazil? They assets they therefore,

same We I or stay. than they would as, up X it moved this judge it try tie describe was XX easier before much to first just up moving was the to bankruptcy were the issued to It sooner. airplanes don't I time. tie initial at believe

next question Crissey we'll from our Kevin Citi. with And take

currently you particular have indeed, be any may on clients that region? other eyes or delinquent Do maybe outside you that of have

before, keeping have comes situation XX I material Outside how as so there, who the everyone Kevin, our XX is on think top that, with I we plan to with, involved and an the any together. customers. alluded Jet No, don't any or concerns certainly eye recapitalization Airways of of is

JVs. Terrific. And other? positions those for then, American, do the applications, don't you, as in you I joint know or prospects the any of general, agreement on if on with LATAM, weigh take venture in

Not about don't to it's tie-ups comment really. place about. talking be thinking and I think folks my may on between or what those commercial they

take our from we'll And Post Advisory. next question with Filipski Russ

delay to questions, I'm earlier questions over not so Avianca going answered were My on point. the with

from Kristine Liwag And we'll question next America. of with take Bank our

rental with you -- Guys, lease for that lessor lessees, to the were in a it you and the Brazil higher if were presuming to had with in aircraft are lease rates with new to versus get you've a -- expecting what you when Were Brazil? aircraft new lease aircraft, if with the a potential looking Avianca get narrow-body? you've that fairly today sign on presumably out, able -- discussions how been --

in -- and lucky place industry a that's an It's norm. get how in X plane to the for that then a existing happens, higher the Occasionally, general. in not works years In X never that's We leases some operator. no. in word, sign rates just and you been place for expect lease or

with would economics next expect leases sort a of date original longer be sort from not will lease be we off end expected that original be. underwriting the rental there would we be and the of the lower in new far rate so And we so have check effect by think the expect heavy to the the operator, where Avianca than XX of of we also is but will mitigating to year

you And that only your you were risk and experience anything you local your highlight there credit look that looked Brazil, Before, at would changed that you reevaluated at also Cape that risk, changes after factors? has are you've how as you And in with you changed the a looking experience is portfolio the after would at? also how at what And and think looking presuming courts were Town you agreement other mitigator main with your or Brazil? forward? going after implement

Brazil, no be let's middle of is Brazil. after So in we're with this. the clear There

underwriting go any Cape how at looking and factors precedent the context resolved. only to world back into obviously, thinking and you it we That's gets mitigant how, are, would repossessing plane not of the going Town we It's no rely one, that day believe It's with situation in realistically terminated about how not works. on a that dealt in So that. jurisdiction. get leases. real other say, that gets your ultimately, the that I in And the you're the

in and So not The is the how this Brazil. playing come with while. together exactly in a we're is making frame in disappointed been business who's involved a implemented process out time anyone this being surprise all for to actual

take from Bianchi our Cantor we'll And Reno Fitzgerald. question final with

the you on been you A rent? first And again disclosed is think when recognize information one date? couple the been the only hasn't on the receive has in questions much and I that would Brazil. you book how rent related is, unfortunately, the But accrued If the rent, of to P&L? question, how Avianca receive will

past our So it clear, package, collect beyond security related once to the goes as we to not cash. revenue we due do unless amounts, be recognize someone

door. judge's the only the cash collecting context to the stay the will and extent prospects we in recognize the comes new so rents, for in And of that

amount might now you're the to of come in willing cash disclose And that the door? through

to No, the of get not the... I'm into specifics going

ask me days? let 'XX can full But quarter you it rental of of this. collected? Maybe Is it quarter has that lease been not this XX one. Is fourth you answer full

Again, going. not given specifics situation, that we're of I'm into this to particular get not the going

Okay.

alone. estimate Brazil let's Avianca So

Yes.

than is to this call. assume or I maybe opinion coming I beginning to that is the that highlighted I Because that you a define, then than absorb you of maybe I aggregate think, depict the so, had the it at originally been of, see additional to the but bit what I out market conservative the decent believe outlook of Avalon of couple mean, chance, would more ago, that a I all still put one my like would the a a in a that which your is bankruptcy, bankruptcy? small days concern contemplated. slightly of situation, easily little of hear this you bankruptcy, able out supply certainly, amount there's of more supply aircraft was incremental hope

are It the of coming But view, recent those context that forward. in smaller Look, that carrier also my situations. done carriers assets out that to very are find we reasonable assets has you've of for going market port the far their to then. bankruptcies of the finding job out going suggestion unlimited confident home has airline way mean an the out have market many other is, in assets, some the that smaller are of assets, the assets. Brazil, My a there, we, with -- of bankruptcies, Avianca nature think recent Primera, absorbing continue come given so of appetite in to had new doesn't like own our that respect and the a

you least coming the think competing for placement context in And Avianca be they're so going to out of at I necessarily don't Brazil. of see opportunities what

to And add -- is I comment. would This just really, Mike to that Kriedberg. just that add

seen a is in XXX. haven't for for, XXX in -- slowdown There particular, demand demand CFM-powered We XXXs.

and a So strong But some of far young actual have CFM-powered for as even is of aircraft XXXs, I majors young to seen buying. magnitude demand new and with focused demand that bit number looking actual bankruptcies, if XXXs. the anything, relatively slow of as the is little XXX around a lot of as We're seeing MAXs even XXXs, really the Neos. XXXs, there where demand, has a new there new U.S. buy on technology,

now seen going So right. of it. to an to We're had some right change. not supply on a if midlife, we've bankruptcy, young got point, we all. a comments we seeing the Mike's if out take -- it's toll At haven't a at

And issues detail Avianca thing on you whatsoever. have there's interests tell from X I add strong We the into only X getting no is or can players. too placement much I'll without

can placing aircraft. and them, actually we waiting do something before have we're no will We with to problem outcome those see the

have Let me tell you, we no of shortage interest.

from in else, and going the forward? remain margin that X% given that at you may expectation explained, and quarter margin is want on fourth ever first the that cash that net time expectation the is stabilize as started Avianca program think the of announced that that just X%. annualized there go Brazil. sure the the go your was to below up declined obviously, I any kind market the that the I related everything question mean, an you 'XX, basis, cash remember I around current it that time back mostly But final was noise of there net But down kind around the of trend you to Or to I margin so possibility if a make launching approximately and -- fleet, of time, when X% modernizing level? lot level. this on My

the by bit. be little year, a would X% with the was level, the this this back believe we So to 'XX of I than quarter of XXXX. are situation this Brazil, half we're expect lower do situation will reflected would it the be when the year the because wasn't But given the or what give take I of look, say, even next about end in year, fourth talking the at around of quarter quarter first where time in fourth fourth and I

not sector of into put further money do you expect basically the pressure the that continuous But on efflux to statistic?

in today but difference on it necessarily I seeing selling money think just I'm is months, what it of but I view I what well. think driven in I to what seen, a see my in XX way invest and in it upon my material assets the the remains don't as don't depend based obviously, be I marketplace. liquidity be do by the will will

questions are further this And no time. there [Operator at Instructions].

time your for Have if reach today. free joining additional thanks have nice you to you questions. Thank Espe. day, you, Thank and for out Feel Okay. a us.

thank presentation. your today's concludes that you And participation. We for

now may disconnect. You