AerCap Holdings N.V. (AER) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the 2024 AerCap Capital Markets Day. I'm delighted that we've got an excellent line of the speakers for you today, some of whom you'll have heard from before and some of whom who will be new to you. Before we begin today's presentation, I would like to remind you some statements made during this presentation 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. AerCap 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 presentation. Further information concerning issues that could materially affect performance can be found in AerCap's annual report on Form 20-F and other filings with the SEC. We will also discuss certain non-GAAP financial measures. A description of each non-GAAP financial measure and a reconciliation to the most directly comparable GAAP measure is included at the end of the presentation. So our first speaker today will be our CEO, Aengus Kelly, who's going to talk us through the supply-demand environment for aircraft and engines. He's then going to talk about the capital allocation priorities for AerCap and how all of this translates to positive returns for shareholders. Then our Chief Commercial Officer, Peter Anderson, is going to talk about the evolution of AerCap over the last 25 years into the market leader that you see today. He's then going to talk about the synergies between the various business lines that we have and talk about how that's translating to higher lease rates and when you will start to see them as shareholders. Then our Chief Risk Officer, Anton Joiner, is going to talk about how we actively manage risk. So the credit costs are never a material driver of the financial performance of this business. Then I'm going to sit down after a short break, with the 3 heads of our departments, our head of Cargo, our Head of Engines and Head of Helicopters to talk through the outlook for their businesses. And finally, our Chief Financial Officer, Pete Juhas, is going to talk about our funding and diversification strategy and why AerCap remains a compelling investment today. But before Gus joins me on stage, we're just going to play a short video, which showcases the AerCap platform. [Presentation]

Well, good morning, everyone. And to reiterate Joe's welcome. You're all very welcome here today to our 2024 Capital Markets Day. This day is all about you, our stakeholders. And with that in mind, in advance of today, we reached out so that we knew the issues that we're top of your mind. And this is the result of what we got back. Unsurprisingly, supply/demand, capital allocation, outlook. So today, I'm going to deal with supply/demand, capital allocation, our strategy. But there are 4 key messages that I want to convey to you, our stakeholders today. First and foremost is that today, we have a very favorable supply/demand environment for AerCap. I expect that to last to the end of the decade. However, beyond that, I expect that supply and demand will largely be in balance for the long term. We have never seen supply overwhelmed demand in this industry and I will talk through that shortly. Next, I will speak about the capability of the AerCap platform. Unique industrial capabilities it has. And this platform adds value to your assets every single day. And that value manifests itself in our returns and the profits and cash flows of the company. It's that platform that creates the capital we have to allocate. And we are very disciplined stewards of your capital. I don't mind what avenue we allocate capital into. What I care deeply about is that at each point in the cycle, we invest that capital in the right place at the right time. It's those 3 factors that have combined to generate AerCap's extremely durable and significant returns that you've seen over the last 15 years and that you will continue to see. So they are the messages that I want to convey this morning. Now I'm going to start with the macro side, the strong industry that we operate in. Firstly, with supply. We're all aware of the challenges that the airframe OEMs have in making the number of aircraft that the customer base wants. But I want to give you context. If you look at the slide on the left-hand side, this shows narrow-body production each year for the last 10 years. At the point here is that we are forecasting that this year, we still will not meet the number of narrow-body aircraft that were produced in 2017 that 7 years ago, we still can't make the same number of aircraft. On the right-hand side, on the wide bodies, it's even more dramatic. We actually have to go back even further than the chart. We have to go back to 2012 before we were able to manufacture the same number of wide-body aircraft that we are able to make today. That's over a decade ago. Now what's happened to passenger demand in that time frame? Well, I've often told you that every 15 to 20 years, the number of people traveling in the world doubles. And this time frame is no different. In 2024, IATA is forecasting that we'll have 156% of the people traveling in '24 that we had in 2012. But look at what's happening to supply. And these assets cannot be disrupted. No 1 is going to come up with a new aircraft and have it in the market in the next 6 months, the next 6 years are frankly, the next 16 years. What we have, and it won't change. So that's my first slide on supply, just to put in context the quantum of the issue that we're facing. Second is something about supply that's not as obvious. This is related to what happens after aircraft are being delivered. So the OEMs are not delivering as many as the market would like, but they are delivering a good few aircraft. So we all know about the first box, they're not producing as much. But the second issue relates to what happens to these aircraft when they've been delivered. When an aircraft is in operation after a period of time, it needs to be repaired. That repair is done -- those repairs are done by maintenance, repair and overhaul facilities, MRO, you'll hear that term today. It basically is the repair shop for aircraft and engines. Now we don't have enough of them today to meet the demand for repairs. Why is that? Well, like a lot of things, COVID had an impact. But the greater impact is coming from the assets themselves. These aircraft and engines are engineering marvels. They fly further, they carry more and they burn less fuel than the previous generation of aircraft. However, they're not as durable. They break down more often. They are strained to the engineering maximum they could be pushed to -- so they do not last as long in surface. So they have to go to the shop, the MRO facility to be repaired. And MRO facility needs the same parts and skilled labor to repair an engine or an aircraft that the manufacturer needs to build them. And there is a very finite supply of both parts and highly skilled labor. So this is the second issue on supply. The first 1 we all know about, but this is what's happening behind the scenes that when these aircraft deliver, they don't stay in service, they spend more time getting repaired. What does that mean? It means the demand for new aircraft is increasing our old aircraft is increasing all the time. So we're seeing increased demand, lease rates, extension rates for older aircraft, which I'll come to on the back of this. Now my final slide here is supply. To me, is the most important slide in the deck. And to a long-term investor in this space, I believe this is the most important slide. I said in my opening remarks, that the OEMs will probably fix their issues by the end of this decade. I think that's probably fair enough. However, for many years, when I've met investors, there's been lots of questions about well gas, what will happen if Boeing and Airbus build too many airplanes. Will we have volatile aircraft values, falling lease rates? I say we won't. That won't happen. We have never had a period of sustained oversupply of aircraft on a global basis ever. So that's why you don't see tremendous volatility in aircraft values and lease rates. I'm not saying you can't have oversupply in a market, a particular market for a period of time due to airline restructurings, et cetera. But there are 2 reasons why we never have long-term oversupply. The first, but not the most important is to do -- we have 2 airframe manufacturers, Boeing and Airbus. Now their bias is to produce as many aircraft as they can, but it is a duopoly. And if they overproduce too many aircraft, what will happen is airlines will come back and say, "I can't take this many airplanes, I'm losing money. I need to cancel orders or restructure orders. But they have a bias to do it. And if you look at this chart here, on the left-hand side, that blue bar for 100%. That's the amount of revenue that the airframers get on day 1. They get 100% of their revenue. The day the airplane flies over the fence that seems obvious, but it's important for the next point. The green boxes are how the engine OEM gets paid. The engine OEM, GE CFM Rolls-Royce, Pratt & Whitney, they only get 25% of their revenue on day 1. They get the rest of their revenue over a 20-year period through 3 shop visits. That's where the engine goes in for a full repair and replacement of parts. The most important thing and engine OEM does is that last shop visit between year '17 and year '20. Now for someone to spend $20 million on a single wide-body engine on a 17- to 20-year-old aircraft. They have to be fully confident that aircraft will be in demand for the next 5-plus years, i.e., a 25-year life cycle. This is the most profitable, the most casual positive thing the engine OEMs do. Anything that eliminates that shop visit is fateful to their business model. And in fact, this exact sharp visit profile was highlighted at the GE Investor Day. So as I said, the most important thing they do is that for shop visits. What could eliminate that. Well, the thing that can eliminate it is building too many new aircraft because if there's an oversupply of new aircraft, the oldest aircraft gets scrapped. The most cash flow negative thing do the OE engine OEMs do is that delivering a new engine for an aircraft. It's the worst thing they do. So they will never ever allow sustained oversupply of aircraft. They can't it's fatal to their business model. And that's why we have never seen since the start of this industry since I've been in it a period of significant sustained oversupply of aircraft and we never will because it is so important to the key participants in the manufacturing chain, the engine guys. So what does all this mean then for you, our shareholders and capital providers. How do we translate all this great supply information I just spoke about into greater returns for you? Well, Peter is going to speak about what we've seen in increasing lease rates and he'll give specific examples. But there are 2 other metrics I'd like to point out that show the impact of the shortage of supply and increasing lease rates. First, on the left-hand side is what we call aircraft extensions. When a lease expires with an airline. It might be after 12 years, 14 years, 16 years. They can decide to hold -- they may decide to hold on to the aircraft, they can't, they'll have a right to, but they may ask us, can we hold on to the aircraft. Historically, that happened about less than 15% at the time because they were getting new airplanes to replace the older assets. So over the last 3 years, this has changed. If you look at 2021, the 4 boxes, the dotted line shows the average percentage of aircraft leases expiring that were extended. And you can see that, that was almost 60%, significantly higher than the average historically. In 2022, that went to almost 70% of the leases expiring were extended. Last year, it got above 72%. Now that means less transition costs, which is millions, less downtime of the asset, which is millions. And generally, as Peter will show longer extensions with better credits. That generates additional economic benefit for you, our stakeholders. The next chart is about gain on sale and what we sell assets for. This is connected to increases in interest rates. Many of you have asked us, what's the impact of rising interest rates and when are we seeing higher lease rentals? Well, as you can probably imagine, an aircraft lease has many similarities to a bond. A bond pays a monthly coupon. And at the end, you get your principal back. And aircraft lease is very similar. You get your monthly lease rental. And at the end, your repayment is the aircraft, the metal itself. The airplane at that point, the value of it is what people expect the future lease rents that, that asset will generate to be. So if you have higher interest rates, other things being equal, you would expect the value of that lease an aircraft lease and the asset value to decline in a higher rate environment. That has not been happening the values have been going up. Let me show you this here. Historically, when I say historically, I'm going back 60 quarters, we consistently sell aircraft at a gain typically around 10% or 11% above net book value. That 10% or 11% equates to about 137% of our book equity because it's levered. Now over the last few years, you can see, we've been selling at much higher numbers, 125% of book, which is closer to 180% of our book equity. Now why is that, as I said, we are selling assets that are already on lease. And those leases may have been put on in a lower rate environment, However, for the buyer of the asset is a professional buyer and knows that when the lease expires, you'll put it out there at much higher lease rates. So this is where you were seeing directly the impact of supply and demand outweighing any impact of the increase in interest rates. So that's our industry on supply and demand. Now AerCap the company I said, this platform creates value every day for your assets. You own these assets, you want this platform to add value to them. How does it do that? Well, first of all, we obviously have more information about what's happening in the market every day, be it demand for different engine types, different aircraft, which MRO shops are capable, which are not, which can deliver on time. How do you spec an airplane? Specking a 777 might cost $25 million? How do you manage overhaul of an engine on a 777, another $20 million. All that knowledge is built into the AerCap platform and is used to inform our portfolio strategy and to maintain our assets. This is important. If we spend $150 million on a wide-body airplane today, we know we will spend $150 million maintaining that asset over its life. You spend the same on maintenance. It is absolutely vital. This is where you differentiate yourself on an operating basis from anyone else. It is vital that when those engines and that airframe is being repaired and overhaul that you do so in a very efficient fashion. The MRO shops are like dentists. They only get paid when they open something up, take something out and put something back in. The difference with these engines is it's $1 million to put something back in every single time. And if you don't know what you're doing, you will find yourself spending millions more. You will find yourself going to MROs that you don't have leverage with where you're at the back of the queue. You spend months waiting for the airplane or the engine to come out. That's what happens, and then you'll be late to the customer. You will have an asset that customer won't accept extended downtime hitting your lease rentals, hitting your downtime. No 1 has the experience, knowledge and capabilities that AerCap has and Tom will speak to that later on in our Engine business. The liability side, you must have a matched duration on your debt and your assets. We're not here to run interest rate risk. We run a hedged book. And you must have diversified sources of funding, and Pete will talk to that later on. Of course, then you have to a strategic offering or positioning for your customer base. Now at AerCap, we have, of course, the largest install fleets with our airline customers. And aircraft are scarce assets. But the most scarce asset in the industry is an engine. And we have more of those than anyone in the world. Furthermore, with the capability of our platform, we deliver aircraft and engines on time, on spec to our customers. I'm going to demonstrate that in a second. But if we didn't do that, you have massive cost overruns. You would have downtime, much less lease revenue. That is the key to running a successful business in aircraft leasing. And you must be able to do it at scale. Last year, AerCap executed almost 1,000 transactions where we bought solar leased aviation assets. that's more aircraft than either Boeing or Airbus produce. To do that every single day to move these complex assets around the world, you have to have a level of operational excellence that comes from the bottoms up process procedure, internal audits. Every good company is built on those basic building blocks, and AerCap is no different, and that creates a level of excellence that enables us to deliver assets every day on time, on spec, if we couldn't do that, as I said, you would see huge cost overruns. You'd see much lower lease revenue because you're not getting assets to the customer on time. You're making mistakes in the MRO shops. You're not ordering the stuff that you need to order to have it at the MRO shops. So that's the AerCap advantage. This is what creates the cash flows and the profits. Now what do we do with those profits and cash flows. Job #1, always, we must have a strong balance sheet. We have to get our leverage point to our target leverage. That is job #1. Without a strong balance sheet, you will never ever be able to take advantage of opportunity when it presents itself. Then there's 3 other alternatives. Candidly, I don't care which 1 we do at all. What I care deeply about is that we picked the right 1 at the right time to maximize the long-term value of this business. Today, I'm delighted that we announced 2 of these 3. In terms of organic growth, our new engine deal and return of capital through our dividend and our buyback, which I'll come to. But all of these are open to us, and I'm going to talk through them. So to start with delevering -- this chart here shows a debt equity ratio. This is a cash flow metric, cash flow. So 1 number in a set of financial statements that cannot live is cash. And this shows you the cash-generating power of AerCap. You'll see 10 years ago, we bought ILFC a company almost 4x our size. So of course, leverage went up. But you can see how rapidly it fell down of a $40 billion plus balance sheet way ahead of anyone's expectations. We got our ratings back very quickly. And then as the cash generation continued, we're able to billions and tens of billions of assets and return $4.3 billion to you, our shareholders before COVID. Then COVID came. And we bought a $30 billion business in GECAS. Next thing, the Russians invaded Ukraine, let's take a $2.5 billion hit to our equity account. Followed that up by returning $3.5 billion to you, our shareholders. I want to say that again. In that period of time, in the last 4 years, we had to deal with COVID, the worst event that ever happened to aviation. We bought a $30 billion business. We took a $2.5 billion hit from the war from the Russians. We returned $3.5 billion to you to shareholders. What happened to our leverage ratio, the cash metric, it went down despite all those challenges, it went down. That shows the cash flow generating power and the operating power of this business. We are now at 1 of the lowest leverage points we've ever been at. And that's why today, we were able to make those announcements, which we're very excited about on organic growth and additional return of capital. So organic growth has been a big driver of this business. You can see from the chart. We've invested over $40 billion, buying the most fuel-efficient advanced aircraft available over the last decade. And today, we're delighted to announce our strategic investment in our unique engine business. Our range of businesses, we have 2 of them. One, we own ourselves completely that predominantly serves GE assets. And the second 1 is a joint venture with CFM SES, which we own 50% of. Both of these businesses are critical parts of the aftersales service provided by the 2 leading engine OEMs in the world to their customers because these are the spare engines. Every time an engine breaks down, it's us that gets the spare engineer. We own them. We have to deliver them. We have to take them back. We have to make sure the paperwork is right. We have to make sure the engines are on spec. It took 30 years to build these businesses and the infrastructure and capability they have. So when the opportunity came to further enhance our position in this industry, we're very excited to take it. And in fact, we've now committed $8 billion to the engine business since the GECAS deal that's bigger than the vast majority of the world's aircraft leasing businesses. M&A. Why do you do M&A? M&A is tough. It is hard to bring people together, to bring cultures together to make sure that the day after the closing, the trains are running on time if you forgive the pun, but the planes are leaving on time, they're arriving on time. It's hard. And you want to make sure before you engage in any M&A that you have the platform that can do it. no matter how good a deal you do, if you don't have the internal capabilities, you will never make a success of M&A. So that's number one. When you got that, you can look at alternatives. So we've done a lot of M&A, done more than anyone. We've done the biggest M&A deals in our industry, and we've done them at bigger discounts. So you want to do the M&A and you're getting assets that are similar to your own at good prices or buying something that you don't have that you want at a good price. And we've done all of these in large size. Next is return of capital to you, the shareholders. I'm delighted today to announce the inaugural dividend, it is modest. It's $0.25 a quarter, $200 million a year, give or take. Why did we do it? Well, for years, I've been saying to you that this business generates extremely stable profits and cash flows and that we have significant visibility into those profits and cash flows for a long time to come. So the dividend is a reflection of that confidence. Secondly, in many meetings with investors, we've had feedback that we like the story. We like the industry. But we just can't hold stock in a company that doesn't pay a dividend. It doesn't have to be a lot, but it has to be something. So they are the reasons that we instituted the dividend. However, the primary means of returning capital to our shareholders will continue to be share buybacks. And today, we announced another $0.5 billion share buyback program taking our total commitment to buybacks to over $8 billion. Now why do we do that? Well, first off, every time we buy stock in the company, we're buying that platform. It's that platform that creates the value every day. Secondly, and somewhat possibly more intuitive is if we look at this. This chart on the left-hand side, shows the value of assets we sold in the first quarter of 2024. So we sold $760 million of assets. We sold them at a gain of $160 million. Now that $760 million had an equity of the debt component. The equity component is $205 million. That's our book equity. We sold that $205 million for $365 million that we've been selling at a gain for many, many years, every quarter, but I just want to spell it out. So we sold it for $365 million. Go to the chart on the right-hand side, that's 180% of the book equity. We then took that money bought back our own stock. And by the time all is said and done, we turned $100 of book equity into $200 of book equity. So there's no investment that can compete with that. The question then you might say to me is, well, what did you sell? Because if you're selling your best assets just to show a gain on sale, then you're buying back stock in a less desirable business. So that would be a f**l's gold, but we're not. We show you every quarter and have always done so what we sell. And you could see the average age there. It's no different over the last 15 years. We generally sell the assets that are between 15 and 20 years old. So the less desirable assets. And who do we sell them to. We sell them to highly sophisticated professional buyers, other leasing companies, airlines, disassembly businesses, MRLs. So that's As soon as I sell them, head down to the New York Stock Exchange as fast as my legs are carrying me and buy back more of the aircraft straightaway by buying our own shares down there. And so long as that trade keeps going. We'll hit it all day long. So what has this meant for you in terms of returns? Well, I've always said, when you ask me, what's the target return in this business. Over the long term, we want to generate 8% to 10% over the risk-free rate on a GAAP after-tax ROE. Now I say that because I want say that again, after tax where are we. It's not tangible book equity. Our Board doesn't believe that such a thing as an intangible asset. Anything that's on that balance sheet was paid for in cash. So it's full equity. And they certainly don't believe there's anything called a noncash charge. Everything was paid for in cash. So the target is to generate that 8% to 10% above the risk free rate. On this chart, the risk-free rate is the 5-year treasury over the last 16 years. That's the green line. The shaded area, is if you add 8% to 10% onto that. The solid line is the actual GAAP after-tax ROE. The only time it dip below was for COVID and the charge we took in the Ukraine. But you even all that out, including those charges. This is what we've generated over a 17-year time frame. Over 9% after-tax or above the risk-free rate. That shows the incredible stability and durability of the returns this company generates. And over the last couple of years, you can see the growth in book value has been moving at 20% compounded. So look, my key message at the stars were one. We are in a very favorable supply-demand environment. I believe it will take until the end of the decade before the air framers, the supply chain get together and work it out. That will be 2030, I suspect. In addition though, and beyond that, the key structural feature of this industry that has prevented oversupply won't change. The engine dies will never allow significant oversupply to happen. Secondly, the AerCap platform adds value to your assets every single day, minimizing downtime, getting assets in the air as fast as possible. It's point us telling someone I lease and ask if you can't get it to them. You're not getting paid. It's pointed if you deliver an asset to someone that doesn't meet the specifications. They won't pay you. You've month-and-month millions and millions of dollars lost. You can't do that every day. Capital allocation. I want to make sure that at every point in the cycle, we're making the right decision to maximize the long-term value of the business for you, the shareholders. It's the combination of these factors that has led to the 16 years of profitability that I've just shown you. and what will lead to the next 16 years of profitability. So with that, I'd like to hand you over to Peter Anderson, our Chief Commercial Officer, who will talk about lease rates, which I know is a topic close to many of your hearts. And then you'll hear from the rest of the team, and I'll see you later for the Q&A. So thank you very much, everyone.

Thanks, Gus. Good morning, everybody. My name is Peter Anderson. I've been with AerCap since AerCap acquired ILFC back in 2014. I was running IFC's Asia Pacific business. I then ran AerCap's Asia Pacific business through until 2018 and then moved across and ran the Europe, Middle East and Africa business until 2021, and I've been the Chief Commercial Officer for the last 3 years. There's 4 key messages I want to get across to you in my presentation today. The first is that aviation is a growing industry. but it is increasingly operating leasing as the means by which that growth is being funded. Secondly, that AerCap's leadership position is not just about our scale. It's about our product offering, combined with our expertise is unparalleled in the industry. Next, I'm going to talk a little about how we maintain that leadership position through laser focus on ensuring we have the most in-demand new technology aircraft at all times. And then finally, bringing all that together, how we're able to capture strong markets like today, to capture strong rents well into the future to generate better, stable returns for you, our stakeholders. Aviation is a resilient industry. as Gus said, it doubles every 15 to 20 years, it's irrespective of the crisis that are thrown at it. If we look at the chart here, only the COVID pandemic really even registers as a traffic growth. And this, the worst crisis in aviation history. We're back out the other side of it in only a matter of a couple of years. This growth is going to continue. It's going to be fueled by the growing middle class in the emerging markets. Let me give you 1 example of what I'm talking about. In India, in 2024, a 15% of all people that get on an aircraft are expected to be first-time flyers. That's 30 to 40 people on every single narrow-body flight that are going on their first-ever flight, 25 million people across the year in that country alone. They're visiting friends and relatives, they're going on business trips, but what they're not doing is stopping flying. They're going to take a second flight, a third flight. As you look forward, you might ask, well, can that growth continue? Well, if we look at a mature market like the U.S. and Europe, there are around 600 flights today between the U.S. and Europe. Guess how many flights there are today between the 2 most populated countries in the world, India and China, 2.8 billion people, 0. Zero flights today between India and China. And that's just those 2 countries alone. Then if you look at South America, Indonesia, Africa, the room for growth is huge. So aviation is a growing industry Aircraft leasing is a growing segment within a growing industry. If I look back at 2003, 30% of all aircraft in the world were funded by operating leasing. Today, that's at 50%. Interestingly, if you look at the last 5 years, the world's fleet grew by 2,200 aircraft. 75% of that growth was funded through aircraft leasing. So we have a growing industry, and we have a growing segment within a growing industry. Let me talk to you now about where AerCap fits in that segment. This is the aircraft leasing landscape in the year 2,000. The 2 largest leasing companies were GCAS and IFC. This chart is shown by number of units. GCAS was more focused on the smaller regional aircraft, ILFC had more of the wide-body aircraft, but both these companies had book values of around $7 billion. AerCap, you can see in the middle of the pack. As I move through -- forward through the years, you can see both GECAS and ILFC growing their fleets organically through large orders with Airbus and Boeing. In that period, AerCap itself, we doubled in size. That was through our own organic growth, but as well through the M&A transactions that Aengus spoke about with Genesis and Finance. In 2013, opportunity came knocking with the AIG Group stating that they were going to be exiting noncore businesses and 1 of those noncore businesses was ILFC. And so AerCap acquired ILFC, and as we move forward, it's interesting to note here, you can see that both GECAS and AerCap, their fleet size is actually shrinking slightly. What's happening here is both AerCap and GECAS are making the conscious decision to start transitioning their fleet out of the old technology aircraft and into the new technology aircraft of the future. And I'm going to come back to this point later. It's an important one. In 2020, as everyone knows, we took the opportunity again to acquire the GECAS business. And as I move forward to 2024, this is the landscape as we see it today. AerCap is the largest aviation leasing platform that has ever existed. Our competitors today are a fraction of our size. We have over $70 billion worth of assets, but importantly, we are now a diversified aviation leasing platform. Not only are we the largest passenger aircraft leasing company, we are also the world's largest engine leasing company, the largest cargo leasing company and the largest helicopter leasing company. And I'm going to speak today a little about the synergies that exist between those businesses and how we're able to win together. Now it's easy to stand up here and say AerCap is better because we're the biggest, and we've got scale. I can stand here and talk to you about how aircraft AerCap leases our assets better than anyone else in the market. And even though I think that's true, the fact is what gives us a competitive advantage in the market is our platform. And I want to explain what I mean by that. Across the 25-year useful life of an aircraft, there are 7 key ways that we are adding value to those assets better than anybody else in the industry. First, financing. AerCap maintains investment-grade credit ratings with Standard & Poor's, Moody's and Fitch having the lowest possible cost of debt is paramount in this industry, as is having a diversified range of funding sources, which our CFO, Pete Juhas, is going to speak about a little later on. Next, purchasing. This platform, and most importantly, the people in it have bought more aircraft than anybody else in history. Getting the buying decision right is 1 of the most difficult things to do in aircraft leasing and experience counts, whether you're buying from the manufacturers, whether you're buying through sell and leasebacks or whether you're buying indeed through mergers and acquisitions, buying the right assets at the right time at the right price. When you go to Boeing and Airbus and you try and buy some aircraft, they're going to quote you a price in today's dollars. And for a lot of people, that's where the analysis stops. Do I have a good price in today's dollars, but it's so much more complicated than that. You need to understand, firstly, the escalation provisions. What is the price I'm actually going to pay when this aircraft rolls out of the factory? How do the engine agreements work? What is the predelivery payment schedules? And importantly, how are you going to manage the specification of the aircraft. This is my third point here. there is real value in the specification of an aircraft. A widebody aircraft can run into the tens of millions of dollars on specification. For a platform like AerCap that maintains relationships with the seat manufacturers the avionics manufacturers and so on, wheels and brakes, galley suppliers. There is real savings to be had. Let me give you just 1 example of this in practice. Aeromexico is taking some 737 MAX 9 aircraft from AerCap's order book. Now when you spec an aircraft, there are certain safety rules around how many seats you can put in the fuselage of that aircraft as compared to how many exits you have on the aircraft. Aeromexico has a relatively low density configuration, so they do not need the mid-fuelage exit door on that aircraft. And instead, they wanted to opt for the plug. Now you've all probably seen in the news, the plug on the MAX 9 aircraft has become quite a topic recently due to the Alaska Air incident. But for a very different reason, our specification team were insisting that Aeromexico take a deactivated door rather than the plug, and I'll explain why. In 12, 15 years, when Aeromexico returns that aircraft to us, we will likely take it and we will lease it to someone that requires a more high-density configuration, putting more seats into the fuselage. When we do that, we're going to trip over the rule around the exits, and we're going to need that MedFuse-large exit door. If we've got a deactivated door, it's as simple as activating it, turning it on in a way you go. If we had the plug, the cost of installing that door is over $1.5 million. You won't see that value when you purchase the aircraft. But through the 25-year useful life of the asset, that is money that goes straight to the nodes of the aircraft. That's 1 example on 1 narrow-body aircraft. There are hundreds of examples on every aircraft that we take and consider for a second, how many examples there might be across a wide body. Next, leasing. I'm going to spend some time talking about leasing and the synergies that I spoke about our various different businesses. But fundamentally, our scale and our installed base of assets with our 300 airline customers around the world, combined with the capabilities and expertise of our other businesses, gives us a relevance to our airline customers and importantly to our suppliers, Airbus and Boeing that our competition just cannot match. To put it another way, we have more levers to push and pull with our customers to ensure we end up with better commercial transactions than anyone else in the market. Fifth, maintenance. There is more money spent on the maintenance of an aircraft than there is on buying the aircraft in the first place. Let me say that again. There is more money spent on the maintenance of an aircraft than there is on purchasing the aircraft in the first place. There is real value to be harnessed through the careful management of the maintenance side of operating leasing. Our engines and technical teams monitor all of the maintenance on our assets, making sure that the maintenance that is done is appropriate, that the downtime on our aircraft is at a minimum, and our aircraft spend as much time as they possibly can up in the air where they meant to be. Our teams maintain our own relationships with the world's maintenance and repair organizations. Sometimes, we even opt not to do the maintenance at all. I know that's quite an alarming thing to say. But if you've got an engine on an older aircraft to put that engine through the shop, might cost $10 million, $12 million on a narrow body. If we go to our AerCap engines team, we may well have an engine sitting there that has green time on it we can hang under the wing and get the aircraft back way without spending the money on that maintenance at all. It's not about compromising on safety. It's about ensuring that the spend on your maintenance is appropriate. Next, transitions. If there's one thing that this platform does better than anybody else, it's transitioning aircraft. We've moved 300 aircraft between airlines since 2021. When you move an aircraft from airline A to airline B. In fact, let me give you an example. We recently took an A320 from Northern Europe in a 2-class configuration. We moved it to an airline in Southern Europe and A320, it's about as simple as the transition gets. Both of the registries are governed under EASA, which is the safety regulation in Europe. So it's as simple as it gets. But when you move from Country A to Country B's registry, what do you need to do to actually get that aircraft on to the registry. For example, something as simple as do you have the right language on the safety placards in the seat backs on the aircraft. All of this needs to be thought through. Then you need to work with the receiving airline -- how many seats do they want in the aircraft? What's the seat manufacturer that they use? What about the avionics, the pilots are going to want commonality between the aircraft? What about the galley cuts that they put the hot food in. Are those galley carts actually going to fit the spaces that are in the galleys on the incoming aircraft. The list goes on or not, wheels and brakes, carpets, side malls, I go through this to give you a sense of the complexity but also to highlight that for a platform like AerCap that does this every single day, there is real value and savings that we can generate through the transitioning of aircraft. Finally, seventh, trading and end of life. AerCap maintains our own part out division within AerCap. These guys are professionals at taking part-out aircraft harnessing the parts that are still valuable within the engine, within the avionics, within the aircraft, recertifying them and getting them back out on lease or selling them into the market so as that value comes to AerCap or sometimes giving them back to me so as I can keep the maintenance costs and transition costs of my aircraft down. Either way, the value stays within AerCap. Our peers generally sell end-of-life aircraft to the part-out shops and that value goes elsewhere. So to summarize, the 7 key waves that our platform is creating value in our assets. It's a very easy thing for me to stand up here and say and give you a few examples. The proof is that AerCap has sold 1,600 aircraft in the last 18 years, and we've done it at a 35% gain to book equity. That 35% is effectively the premium that our trading partners are prepared to pay us for aircraft that come from the AerCap platform. Now I spoke about leasing, and I'd like to spend a little time going through the different businesses that we have. We're going to hear later on today from our Head of Engines, Tom; Head of Cargo, Rich and from our milestone Helicopters business, Pat, the synergies that are existing between these businesses are helping us win together and create better commercial transactions. I think the best way to illustrate this is if I just take you through a few examples of where this has actually happened. The first example I have for you is gold. is a low-cost carrier in South America. AerCap leases 35 passenger aircraft to gold. Now gold didn't restructure their business during COVID. And they had some cash issues as we're coming out of COVID, which meant as their engines came due for engine shop visits, they didn't have the cash to pay for them. Our engines team we're able to supply spare engines to go to get their aircraft back in the air, which is what they needed more than anything else. Further, our cargo team was leasing 737-800 aircraft freighter aircraft. So as could fly for a company called Mercado Libre in South America, which is the largest e-commerce platform in South America and a huge cash generator for gold. Now ultimately, GOL has gone into Chapter 11. The solution that we're able to come up with for GOL is we found another 7 spare engines to put into the gold business to help them get their assets back flying. Through our relationship with CFM, we were able to secure and backstop engine shop visits for the gold business to get their run-out engines through the shop and back under wing. We continue to deliver the cargo aircraft so as they can broaden their relationship with Mercado Livre. And then through our relationship with Boeing and discussions with GOL, we were able to take over some of the gold order book for MAX aircraft buying the right aircraft at the right time at the right price. As they come through the Chapter 11 process, many of our competitors are now having their aircraft handed back to them with run-out engines and they'll need to go and find shops and try and get their engines shopped and try and release their assets. AerCap has kept all of our assets with the gold business and we've broadened our commercial relationship and acquired some additional assets. Another example is Emirates. Emirates, as you may know, is 1 of the largest airlines outside of the U.S. It's the largest operator of the 777-300ER aircraft. But this story actually starts with our cargo team. AerCap today is the joint venture partner on converting 777-300ER passenger aircraft into the 777-300ER SF cargo aircraft. Now Rich can explain that in much more detail than I can. So I won't go through it. But what we're able to do is line up many of the 20 777-300ER passenger aircraft that we have committed into that program, they're on lease with Emirates. We're able to line up the lease return dates to perfectly line up with the cargo conversion induction dates. But as those planes move into the cargo conversion program, we can drop the GE90 engines under wing. We passed them to our AerCap engines team and they're able to get them back out on lease in a tight engine market. And in fact, some of those engines are actually finding their way back into Emirates themselves. Further, Emirates as the largest owner of 777 aircraft in the world has now decided to convert some of their own aircraft in our program, broadening the relationship between the passenger aircraft, engines and cargo. Not to leave out our helicopter friends. China Southern is the largest airline in Asia, a very large long-term customer of AerCap on the passenger side. Our engines team, I know lease is over 50 engines into the China Southern Group. Through introductions we've made to our milestone colleagues, they've been able to secure helicopter business with the China Southern subsidiary, and we now have AerCap large S-92 helicopters doing oil work in the South China Sea. There are plenty of other examples I could give you where milestone is, in fact, introducing my team, the passenger team to new customers that are helicopter operators that want to branch into commercial aircraft. It's just a few examples there to give you a sense of how we're able to win together. If you don't have this diversity, you won't know about these opportunities. You won't be able to provide these commercial solutions. Now this, of course, all starts and stops with making sure you have the right aircraft that the market needs at the right time. This is AerCap's portfolio back in 2014. It was built around the A320 family, the 737NG, the A330 and the 777. These were the right aircraft to have in your portfolio 10 years ago. You can see the first of the new technology aircraft coming into play in the bottom left there, the 787. What we saw in 2014 was a clear path whereby the new technology aircraft was going to come in and replace the older technology. If you want to have the right aircraft today in 2024, you needed to be making decisions about that 10 years ago in 2014. Let me move you through the years and show you the strategy playing out. You can see we are intentionally sunsetting those large blue bubbles downwards and to the right, which means they're becoming a smaller part of our portfolio and then moving importantly into an older age bracket. The worst aircraft you can have in your fleet is a high book value, new, old technology aircraft where the replacement technology is already in production because you will not get the 25-year useful life out of that aircraft. Now I pause here in 2020 for a reason. This is just before the GECAS transaction. I want to show you how that impacted our portfolio strategy. So moving forward, again, it didn't impact it at all. The 2 largest leasing companies in the world, AerCap and GECAS were following exactly the same path. We've both seen the same thing back in 2014, and we were both building a fleet of new technology aircraft being the 787 the A350, the A320neo and the 737 MAX. Here in 2024, you can see that strategy has played out. to show that to you another way. This is the same time period 2014 to 2023. We had 6% new technology aircraft in 2014. At the end of 2023, we're up at 70%, and we are well on our way to hitting our target of 75% by the end of 2024. Again, I put in place the GECAS acquisition to show you the negligible impact this had on our portfolio, our strategy. We were able to double the size of our business with the GCS acquisition without compromising on our fleet in any way. So the other decisions we made in 2014 to have the right aircraft for today. What are we doing today to make sure we have the right aircraft for tomorrow. What I'm showing here on this chart, these are the largest order books in the world. On the left, these are the aircraft with the largest order books in the world. On the left is the narrow body on the right is the wide body. The dark part of the bar, these are the aircraft that have delivered and are flying today. The lighter part of the bar, this is the backlog that currently sits with Airbus and Boeing. You can see -- at the top 3, AerCap is focused on the A321neo, the 737 MAX and the A320neo. In fact, we maintain orders for 6 of the 8 most in-demand narrow-body aircraft in the world. So which ones don't we have? We don't have the MAX 7, and we don't have the MAX 10. Neither of these aircraft are certified by the FAA. And whilst I have every faith in our friends at Boeing and their ability to get those aircraft certified, they will, there are still hurdles to be overcome. But it's not just about the certification. If we look at the MAX 7, this is an aircraft that might surprise you is built around 1 airline, Southwest. In fact, there are less than 10 airlines in the world that have ordered the MAX 7 aircraft. It's new technology. It's got a lot of orders, but for a leasing company, what we need to see is a high user base because our business is moving assets between airlines across a 25-year useful life. On the wide-body, the story is quite similar. We are laser-focused at the top there on the 787 family and the A350-900. But even within these types you don't necessarily want every variant. You need to understand the market of the aircraft that you're going into. We are the largest owners of 787s in the world, but we have not taken delivery or ordered a single 787-10. It's not because it's a bad aircraft. It's a technological marble, but there are less than 10 operators of that aircraft today. It's a larger aircraft. So you're going to buy a larger aircraft your transition costs are going to go up. And the universe within which you can lease that aircraft is significantly smaller. You're much better off going with the 787-9 that has over 50 operators today. So you can intentionally see there for the AerCap fleet in the circle there with the percentages. More than 50% of our book today is in the A320neo family and the 787 I'd like to drill into those 2 aircraft types for you a little bit and show you what we're seeing today on lease rates and not what we're seeing as compared to the last couple of years, let's go back to pre-COVID, and compare today's market to them. So firstly, on the A321neo, I should say the A321neo is by far and away, in our view, the most popular narrow-body aircraft in the world today. It's interesting because with the older technology, the CEO, it was the A320 CEO rather than the A321 that was the more popular. I talk about making decisions yesterday to have the right aircraft today. We actually decided to convert all our remaining A320neo order book from 320s to 321s a couple of years ago. What we saw was that in a world with aircraft congestion -- sorry, our airport congestion and air traffic control congestion, the larger variant was going to become the more popular and we've been proven right. So we leased 4 A321neos. What I show here at the dots, the heart of the dot is the lease rent we achieved and the X axis, this is the year that the aircraft delivered. So in 2019, we leased 4, they delivered in '21 and 2022. In 2023, we leased 53 A321s. And not only did we lease significantly more, we did it at 20% higher delivery rents. And what I'm talking about here is the rent that the airline will actually pay us. This is after escalation, after interest rate adjustment after specification adjustment, we are locking in A321neos in 2023 at a 20% higher delivery rent, which will then run for 12 years. The story on the 787 is similar. In 2019, we leased 2 787-9s. This is pre-COVID. During COVID, 2020, 2021, 2022, we didn't lease any 787s. There was no market. In 2023, the market came back strongly, and we've leased 13. And we've leased those at a 10% higher delivery rent. It's not just about the new aircraft. If I look at the used aircraft for a second, and I'm going to do this using the 737 NG as our example. Here are all of the 737 NG deals that we signed in 2019. The height of the bar is the rent. The length of the bar is the lease term that we achieved in 2019. If I overlay 2023, you can see we're getting higher rents. But as well, our average lease term back in 2019 was 5 years. In 2023, our average lease term is 7 years. We're writing longer deals. Another dynamic that I'm sure Anton is going to talk you through in his section on risk is that the credit quality of our underlying lessee is better today than it was pre cover. Now the credit, obviously, during COVID took a dip, but we've come out the other side and we're writing better business. So if I summarize that for you, we are writing more business today than we did in 2019. We are writing it at higher rates. We're writing it at longer lease terms and with a better credit customer. We are fundamentally writing better business today than we did in 2019. So you might ask, well, when are we going to see the results of all of this better business. When is that coming through in the financials. There's no getting away from the fact that we are coming off the heels of the worst period in aviation history, the COVID pandemic. And during this period, 2020, 2021, we still had aircraft coming off lease. We still had orders coming from the OEMs. Aengus spoke this morning about how we committed to take delivery from Airbus even during COVID, and we did. We took delivery of all of the aircraft that we committed to. We had to place those aircraft into a weak market. They are the dark blue bars that you can see here on my chart. The good news is that all of these leases are now in place. The lower economic deals that we had to write during COVID, you are already seeing them in our financials today. In 2022, we started to see the market recover. These is the light blue bars. These are the aircraft we're largely taking delivery of today. The strong market deals that we're seeing in 2023 and indeed is increasing through 2024, we're taking delivery of those today and over the next 3 or 4 years. So if you think about that for a second, those higher rents are going to start coming into effect in the next couple of years. But at the same time, some of those weak market deals that we wrote and are already in place, some of them are going to start coming off lease, and we're going to be able to reset the economics of those deals as we move forward. It's going to create a real tailwind for AerCap into the future. So if I can summarize what I'm trying to get across in my presentation today, we operate in a growing segment of a growing industry, and we sit at top that segment. We are the largest, most diversified, most sophisticated aircraft aviation leasing platform that has ever existed. We add value to our assets to our platform and combined with a laser focus on making sure we have the right aircraft, the most in-demand new technology aircraft at all times. We are able to capture strong markets like today, harness higher rents and ensure we have stable returns well into the future for U.S. stakeholders. Now this, of course, is only possible with a robust risk and credit framework which, of course, we have at AerCap. And with that, I will hand over to my colleague, Anton Joiner, our Chief Risk Officer, who's going to take you through the risk side of our business.

Good morning, everyone. My name is Anton Joiner, and I've been Chief Risk Officer at AerCap for over 20 years. Today, I'm going to tell you why credit costs are not a material factor in this business. I'll talk about our use of lease protections. I'll talk about our processes. I'll demonstrate how we run this through the most significant downturn the industry has ever faced. And I'll give you live examples of how our culture of action materially produces better outcomes than our peers. Put together, you'll see the credit costs will remain a sundry line item. So what's going on in the business on a day-to-day basis to make this happen? Well, we've obviously brought the right aircraft, modern, fuel-efficient, in-demand aircraft. And we have the largest leasing platform. So every aircraft that comes online is generating multiple leads. And we're going to select our lessee based upon the best risk-adjusted returns with due consideration for geographical concentration and due consideration for lessee concentration. And once we've selected our lessee, then we go about executing our lease. Our lease is a document that's tailored to the individual credit requirements of our customer. So if it's a high-risk lessee, they're going to be paying maintenance reserves. That's an additional cash amount paid every month for the maintenance life that's been consumed in the prior month. A higher risk lessee will pay a significant security deposit. And if we still believe there's payment risk, we'll be looking to take the cash directly from the retail source. So once we signed our lease, and we've delivered our aircraft, then we're in the day-to-day business of monitoring the cash payments. And barely a day goes by at AerCap without a dozen conversations around the payment behavior of our lessees. But it's all very well getting paid. If your aircraft is stuck in a distant corner of an airport with parts being removed, that's a very serious situation. So not only are we ensuring that we're getting paid, we're monitoring the utilization of our aircraft on a daily basis as well. And if our aircraft are grounded for more than 24 hours, we'll be asking the questions, is routine maintenance being missed? Are parts being removed? And if we don't like what we're hearing, then we'll move decisively to take aircraft back, repossess the aircraft, relocate the aircraft, take control of the original technical documentation. And while we're doing this, our leasing team have already lined up the next customer quite often before the previous lease has actually been terminated. And why is this important? It's important that if you minimize the ground time of aircraft, then you're significantly mitigating any loss. I want to talk about the constantly improving credit quality of the portfolio. It's improvements are not just a result of our day-to-day actions, but also a result of acquisitions. And you can see here that when we acquired GECAS, we acquired 38% more names overnight. Diversification is obviously our principal credit tool. But in this instance, we're also more relevant to more people. We have a seat at the table but more refleeting discussions. And that, again, is driving down aircraft placement risk. It's managing downtime. In numerical terms, you see the top 30 names in our portfolio prior to GECAS accounted for around 75% of lease revenue. After the GECAS acquisition, it was down to 60%. And the last chart here shows how credit quality is normalizing after COVID. You see a significant bump in December '21 when we acquired GECAS. That was a portfolio packed with very strong names. And then the sequential improvement through 2023, and we think that will continue through 2024. You see our internal score here is just a shade under 6. That won't mean an awful lot to you. You don't have our credit model. But we put all 300 customers through the Moody's model, and the weighted average credit score comes out at just better than a Ba3 or BB-. One of our principal key performance indicators and our key credit metrics is days sales outstanding or in other words, the amount of time it's taking us to receive an invoice. And you can see here, it's just 2 days, just 2 days. So our credit -- our portfolio, the weighted average credit score of our portfolio may be subprime, but we have no arrears. And why is that important? Well, if our security deposit accounts are up to date, our rent accounts are up to date, our maintenance reserve accounts are up to date, then you're in the best possible position to ride out with zero credit cost if your lessee gets into difficulty. Now we don't think 2 days is just impressive on an absolute basis. When mapped against our global leasing peers, we're outperforming them by between 10 and 30x. How do we do this? Well, if polite reminders go unanswered, we have in excess of 30 separate [ amends ] of default in our lease. We have numerous methods, numerous ways which we can ground aircraft, and there's numerous jurisdictions we can bring enforcement actions in if required. COVID-19 provided us with the best possible example of the durability of this business. We saw significant amounts of government money coming into airlines at the time, and this is because airlines were critical transport infrastructure. But the response to COVID-19 wasn't going to hang together unless lessors participated. And having the largest portfolio in the world, we were quite frequently managing and running those projects. What are we looking for in order to participate? Firstly, all stakeholders had to buy in. Secondly, we had to protect the long-term returns of the business. There was significant pressure from lessee saying you're going to have to chop your rents, significant pressure from lessee saying you have to return aircraft. But we can see that COVID was relatively short-dated in duration and that the recovery on the other side was going to be emphatic. So the deferral was the chosen tool for dealing with it and deferrals had to be repaid. Lastly, our aircraft are being used during COVID, so maintenance reserves had to be paid, and there was always a portion of rent that had to be paid as well. And you could see that even in the depths of the crisis in the middle of 2020, we were still receiving 65% of our monthly run rate and this was very quickly increasing through '21 and '22. History have shown us that when we work on a consensual basis with our customers, we always receive 100% of our money back. And this is indeed what happened in the vast majority of cases here. But there was always going to be situations where lessees were gonna seek the protection of bankruptcy courts to restructure their balance sheet and to lower their costs. The critical point here, this was not the time to be learning the ABC of insolvency. There were things that you had to be doing months in advance of the petition date, and Peter gave a great example on GOL our low cost airline in Brazil. We knew to keep our claim to an insignificant amount, we had to have a large fleet at GOL, which was indispensable. So in the weeks leading up to the petition date, we were participating in sale and leasebacks, and we were delivering new engines. So through COVID, we restructured over 150 airlines and over 1,000 operating leases. And on the other side, COVID, you had fleets intact as a result of our actions, economics intact. I want to give you an example now of how our culture of action materially saves us a lot of my, tens upon tens of millions of dollars in various instances. And I want to talk about GoAir. GoAir was a low-cost airline based in Mumbai, operating a fleet of around 55 aircraft. And this has become the core celebre for asset protection in our industry and proven that never has the price been so high for getting it wrong. We could see in 2022 that aircraft are being grounded. When aircraft are grounded, parts are being removed from aircraft and there was a mounting financial problem with the airline. Now it was not the time to be standing by waiting for somebody else to sort the problem out. So we create red lines. You have to keep our aircraft flying, you can't remove parts from our aircraft, you've got to keep paying. But those red lines were very quickly breached, so you have to move decisively. We exerted significant leverage on the airline to move the aircraft out of India and crucially to deregister the aircraft. And in this time, we're using the significant industrial capability of the business to secure those all important engine slots to make sure we have hanger slots for the aircraft, so aircraft can get repainted, so that transition of the cabin can occur. And our largest leasing platform in the world is out there finding the second home for the aircraft. Meanwhile, if you're back in India, wondering what to do, the curtains come down. It came down in May last year. And if you're still there, you haven't been able to move your aircraft, you haven't been able to access your aircraft, you haven't been able to remarket your aircraft. But [ AerCap ] is gone. We placed the aircraft with Cebu in the Philippines, much better credit, same terms. This is the experience of the platform. We did the same thing with Kingfisher in India. We did the same thing with SpiceJet in India. We did the same thing with Jet Airways in India. I want to give you another example now of how we moved even quicker to keep our credit costs to zero. And then the beginning of 2023, we could see that the project by Avianca to acquire Viva Colombia, where we had five aircraft was beginning to falter. And we knew this because we were on site on a daily basis in Medellín and Bogota, and we were speaking to the Ministry of Transport. So the red flags are there. What are we doing? We're making sure all our property is installed on our aircraft. We've got the right engines installed, making sure the aircraft are flying, and we're making sure that we're getting paid right up until the end. Now the airline enters a form of credit of protection. So again, decisively, we moved quickly. We create significant leverage. We moved the aircraft out of Colombia into the U.S., and we have our team working at the same time to secure the next customer. From those first discussions to the aircraft being home dry is no more than 8 weeks. The critical point here is that if you can't move at that pace, and if you can't guarantee the quality of product, you're never going to secure a customer of the quality of LATAM. I've used just a couple of examples here. I could have used more. We did the same thing in Vietnam last year. A lot of people think that Vietnam is a difficult place to move an aircraft out. We moved our aircraft out of Bamboo. They're now flying for Thai Airways and for Etihad. Better credits, same terms. We did the same thing only a couple of weeks ago in Indonesia with some operators. But this isn't happening on a daily basis. When it does happen, it's largely consensual. You won't read about it in the press. But these are very important capabilities to have. These are capabilities unique to AerCap. So if you have the right mindset, you have the scale and the experience, credit costs are never going to be a significant factor in this business. Thank you.

Thanks, everybody. That ends the first half of proceedings. We're going to have a quick coffee break, and we'll see you here afterwards for the panel discussion. So thank you. [Break]

Okay. Well, welcome back. We keep these three gentlemen away for me for long enough. So we won't -- without further ado, we'll get into the presentations. But just beforehand, I would like to draw your attention to the screen here. Here's a QR code. And if you go to this link, the questions that come up from -- comes straight up to my iPad, and we'll direct them to the three gentlemen at the end of the Q&A discussion. So feel free to take out your phones. It's not going to be on the screen for too long. It will come up again after their presentations. You don't have to submit your questions immediately. But if you take down the QR code now, at least it will be saved. Otherwise, you can go to slido.com and you can use the #AerCapCMD. So don't say you didn't get the opportunity. So without further ado, I'll hand over to EVP of Engines, Tom Slattery.

Thank you, Joe. I guess the first thing I do is a little bit about myself. I started in the aviation industry 25 years ago with GE Aerospace. But more importantly, I spent the last 22 years in this business, AerCap Engines. I've held various technical and commercial leadership roles. So as a result, I'm very proud to be here today to talk to you about the business, our portfolio, our growth, our industrial infrastructure and the impact we're having on the AerCap passenger business. So at AerCap Engines, we're the biggest lessor of commercial spare engines in the world. We're twice as big as our nearest competitor. We have 140 airline customers. We also have two key strategic partners with GE Aerospace and CFMI, the two biggest manufacturers of jet engines in the world. We leased over 1,000 engines, and 80% of those engines are new technology, that is the technology on the most popular Boeing and Airbus Aircraft today. We're growing. And amazingly, since acquisition by AerCap, we've doubled the size of this business, committing $8 billion to the balance sheet. That includes the $3 billion announced this morning for 150 LEAP engines. This is with a trusted partner, long-term commitments and very favorable returns. We have very strong synergies across the AerCap business as well as having 1,000 leased engines in the marketplace. We also manage the engines installed on all of our aircraft. So this is another 3,000 engines. We aim to optimize the maintenance expenditure on that portfolio, and I'll talk some more about that later in the presentation. We play a key role for GE Aerospace and CFMI. We are part of their critical infrastructure, and we've built an unmatched industrial expertise and global footprint in this space. So we go to market with two brands: AerCap Engines and Shannon Engine Support. Shannon Engine Support leases over 400 engines in this space. Their primary focus is on the support of CFMI, that is CFMI's engines and customers in the marketplace. Shannon Engine Support is a 50-50 joint venture between Safran and AerCap Engines. And as you know, Safran is also the 50-50 joint venture partner with GE and CFMI. AerCap Engines leases over 600 engines in this space. We lease engines of all types to our airline customers, but we also have a focus on supporting the products of GE Aerospace and their customer operations. And as I said in my opening slide, between these operations, we leased over 1,000 engines in the marketplace. And to put another statistic on it, these two organizations are responsible for supporting 60% of the world's new aircraft. I'm struggling with this clicker, apologies. So you've heard Aengus and Peter talk about the supply side constraints in the industry. There's a shortage of aircraft, a shortage of engines and a shortage of spare parts. You've also heard from Aengus that the durability of new technology engines is not as good as its predecessors. Together with our partners, we have had the ability to predict the demand driven by these phenomenon. And as such, our 93% of our portfolio is under long-term commitments. This is predictable and stable income well out into the future. The balance of our portfolio is in our short-term rental segment, which generates premium rental rates and support our customers in emergency situations. We have two other areas of interest in the portfolio. Our engine exchange program. I mentioned that we manage the maintenance on our 3,000 installed engines or engine at -- aircraft. We are able to move engines around our system to make sure we optimize each aircraft. And then finally, our asset management activity. We manage all of the engines used in the GE and CFMI customer operations, all of the spare engines, and I'll talk some more about that. We have a global structure for the delivery and redelivery of engines, the storage, delivery and redelivery of engines, as well as the AerCap locations for commercial activity. We have a commercial center in Cincinnati, alongside our biggest customer, GE Aerospace. And then we have distribution centers covering each continent in the world. Our key distribution centers are in Ireland, the U.K. the U.S., Hong Kong and Singapore. If I draw your attention to the photographs. On the top left, the engine, you can see in the picture, is a GEnx engine, the engine of the 787 -- Boeing 787 aircraft being lowered into a transportation stand for dispatch to a customer. And on the bottom left, you can see our technicians inspecting an engine, the internals of an engine at redelivery. This network is capable of delivering over 1,000 engines a year to airlines. And to put another statistic on it, at any one point in time, we can have up to 50 engines in transit around the world. That is either on trucks or inside aircraft, not on the aircraft, inside the aircraft, on its way to a customer. So we also use this network to maximize and optimize the maintenance cost in the AerCap portfolio. You heard Aengus and Peter say that the maintenance investment in an aircraft can be as much as the acquisition cost. In this example, this is an Airbus A320neo with a life cycle of 20 years, and you can see that the maintenance investment on the engines alone is $53 million. Our aim is to take 20% out of that. We do that with our technical expertise, our commercial penetration at the airlines and our industrial footprint. We can put the right engine on the right aircraft for the right lease. It is an unmatched capability in the industry. So to summarize, I talked about our growth. We acquired equipment early in the cycle with long-term commitments. We leverage our industrial platform to transition that equipment and support our AerCap portfolio. And then we extend the value of our equipment with engine leases, engine exchanges and maintenance optimization. So with that, I'll hand over to Richard, who's going to talk about one of our other life extension programs of freighter conversions.

Well, hi, everyone. My name is Rich Greener, and I'm head of AerCap Cargo. We're a dedicated team within AerCap. We've got 30 years experience and we're specializing in freighter leasing and cargo conversions for the air cargo market. This clicker is -- so we are the global leader in freighter leasing, and we have 120 aircraft committed to the cargo portfolio and the program. And that represents 2% of the AerCap total portfolio. We've got no AAGs and we're placed out until 2025. But many customers and the portfolio looks like a 737 narrow-body, a medium wide-body 767 and a wide-body 777 freighter. And as Peter said earlier, cargo gives optionality to the passenger aircraft. We can diversify the market and we can diversify to a different customer base and it adds more economic life to the actual aircraft. So a freighter aircraft is, on average, retires after 35 years. So that gives you 10 to 15 years of more economic life to the aircraft. So that's more lease rate. That's more maintenance reserves. And post conversion, it gives you a lower transition costs than passenger aircraft. So we've been at this now for 20 years. We have converted over 135 aircraft over that time period. So we design, we develop and we manage cargo programs. And we've got the luxury of having a very large portfolio of aircraft to look at and identify for cargo conversions. So a fantastic pool of feedstock aircraft. And we've also got the scale, so we can invest in these large programs. And we're also the first mover in the e-commerce market, especially the narrow-body with customers like Amazon, JD.com, which is the Chinese equivalent of Amazon, and Mercado Libre in Latin America. And we believe this is the largest growth segment in the next 20 years. So when I look at the air cargo market, there are several factors to support the long-term investment in air cargo. If we look at the long-term growth, the air cargo growth is expected to grow by 4.1% per annum on average over the next 20 years. But when I look back at the last 20 years, and despite the -- whatever happens during that time period, it actually grew on average by 3.6%. The market is recovering from the declines in '22 and '23 and post COVID. And IATA are forecasting that in 2024, the average growth will be 4.5%. The cargo yields are holding. They're 23% higher than they were pre-COVID in 2019. And when we look at the air cargo revenue, 2023 was estimated to be $135 billion. Now 90% of that revenue goes to the dedicated freights operators and combination carriers. What is a combination carrier? It's a passenger operator that has a cargo network attached to it. So Emirates Cargo, Lufthansa Cargo, Turkish. And a lot of those combination carriers and dedicated -- freighter operators are AerCap customers, and we already have them in our portfolio. And then we go on to aircraft replacement. Well, over the next 10 years, there's going to be a freighter replacement wave. The Classic Aircraft of the 737, the 757, the 767, 747 and MD-11 all need to be replaced over that 10-year period. So the air cargo needs more fuel-efficient, reliable aircraft despite the growth. So we believe that the air cargo market is resilient. And I want you to now focus on a different sector within the air cargo market, and that's three delivery streams, which are focused on e-commerce, air cargo networks and dedicated freighters. It's e-commerce platforms, you may know these platforms such as Amazon, manufacturers direct to the consumer. They've developed and adopted direct to the consumer strategies and shipping to air cargo. So let's just focus on e-commerce, and I gave Amazon an example. Amazon started their air cargo network in 2016 with 767-300 freighters. They developed into the 737-800s, and AerCap supported that with them. And they were very U.S. centric. And then they moved that into Europe and now India. And that was over an 8-year period, and now they operate over 90 aircraft and it will grow to 100 with options. And there's other examples of e-commerce platforms, Mercado Libre in Latin America, JD.com in China and Yamato Transport in Japan. They're all e-commerce platforms that adopted air cargo networks and dedicated freighters. Why? Well, the reason why they need these air cargo networks and dedicated freighters because speed of delivery. And when the manufacturers of the direct consumers looked at this, they also need the air cargo networks and the dedicated freighters for their -- to put the goods into the consumer. And -- but they use third-party cargo operators such as DHL, Atlas, Kalitta , FedEx and UPS, and they create their own niche networks or [ Infinix ] networks for their own system. But they also sell into the e-commerce platforms. So when the shipping industry looked at this and they saw that the benefits of the direct consumers were doing to the strategies, they realize that there's a gap in the supply chain. So the three largest -- in the world, Maersk, MSC, CMA CGM have developed their own cargo networks and are now operating wide-body freighters to capture some of this market. So these networks are evolving, and there will be hybrid systems over time. But this we see is the largest growth sector and the fastest growth that we see at AerCap. So what are AerCap going to do about this? And how are we going to meet this demand and growth? Well, the near-term growth is going to come from these best-in-class conversion programs that we've developed over time. The 737-800, we started this way back in 2013 to start the planning. And in 2015, we launched the program with Boeing. And in 2018, it got certified. Now we saw this wave of requirements and e-commerce before anyone else because we're ingrained in the cargo market. We know how to do this. We're at the coal face every day. And we've converted 60 aircraft at the moment. And we've got 12 conversion slots left to fulfill. And we have options of feedstock to actually grow that platform further. And in 2022, we launched the A321-200 freighter, and that's with EFW ST Aerospace and is supported by Airbus. We have 15 orders with options and this aircraft is the best in class to replace the 757-200. Now there's 300 of these aircraft that need to replace over the next 7 to 10 years. So we see that as a good opportunity for growth. And it also gives the Airbus operators the chance to operate freighters, and a good example of that is Qantas, Lufthansa and Indigo, which is a low-cost Indian carrier. They all operate A321 freighters today. And then I come on to the most comprehensive program, which is the 777-300ERSF. We're co-investors in this program, as Peter said, and it's the biggest industrial program that I've ever been on. Certification is on track for mid-2024. We've got 20 firm aircraft committed to this program, including the prototype. This aircraft is going to replace the 747 and the MD-11. It's a perfect aircraft for the e-commerce and express market. Why? Well, it's a 100-tonne freighter. It's twin engine. So it's fuel efficient. And the payload to density ratio is perfect for that market. We've got options in place to grow this platform, and we've got the feedstock. So we're supplying the next generation of freighters for air ago. So in summary, we're a trusted lessor in the sector, we've got the innovation to do this and very successful programs in the past and now in the future. So with that, I'll pass you over to Pat Sheedy, who's going to talk to you about our helicopter business.

Thank you, Rich, and good morning, everybody. Over the next few minutes, I'm going to try and give you a brief overview of our helicopter leasing business Milestone Aviation. Unlike the businesses led by my colleagues, Tom and Rich, the helicopter leasing space isn't as explicitly intertwined with the commercial aircraft leasing space that is always in the core of AerCap's operations. As such, I'll try and provide some color on what it is we lease and finance, how we structure those products and where and to whom we provide rotary solutions. But first, who are we? Milestone is the global leader in helicopter leasing. And we were founded in 2010. We were the first company to provide operating lease solutions at scale on rotary assets with a portfolio of over 300 helicopters on lease to 50 customers in over 35 countries. So like AerCap, we are truly a global business. It's an exciting and dynamic part of the aviation ecosystem, a business which, after managing through a deep and elongated downturn at the latter part of the decade, is now benefiting from significant macro tailwinds. Our fleet utilization is high, and we see strong demand across all asset classes. Ultra low OEM production over the last decade has fueled demand for our installed fleet, and we have developed a best-in-class team with unparalleled expertise at managing this asset class. Across all metrics, we are the industry leader. On this slide, I tried to give you a brief overview of what it is the overall supply and demand dynamics look like within the rotary sector. If I look at the left-hand side and focus on supply, you can see the OEM landscape. Here, only Airbus and Leonardo produce helicopters at scale for our target markets with Sikorsky and Bell now very much focused on military applications. Just to give you an idea of OEM production levels, the combined production of both Airbus and Leonardo over the last 5 years of heavy and super medium helicopters for the civil space was just 15 units per annum. This is compared to 130 helicopters in those categories in our fleet and indeed, this is not 70 A320s per annum. Production levels here are much, much tighter. In addition, both Airbus and Leonardo are also active producers of military helicopters. So across this OEM landscape, there is no motivation on behalf of the OEMs to overproduce for the civil space as that production capacity can simply be redirected to military when civil demand is depressed. If I look at the right-hand side of the slide, this looks at the demand environment, and this illustrates the core of our business model. Unlike commercial aircraft leasing where the ultimate demand comes from underlying fee-paying passengers, our underlying demand comes from large corporates and governments or government agencies. Our operators who are usually our direct counterparty for our lease, fly, maintain and crew the aircraft. But typically, they back to back our lease contract with an underlying contract from a national or international oil company, government agency or other government department. This gives us strong visibility into future cash flows and multiple avenues to manage risk. In some circumstances, Aramco being a good example, we lease directly to the end user and operate the aircraft themselves. So what is it we own? We own and finance mission-critical assets. These are twin-engine industrial helicopters that work for a living. Now if I showed you this slide 10 years ago, there probably would be one picture on it. At that point in time, our portfolio was very much focused on oil and gas with over 85% of our assets focused on that mission. However, over the last 10 years, we have significantly diversified end user base for this product. And now over 40% of our portfolio is focused on other missions. I'll touch on each of those missions briefly now. Firstly, looking at offshore passenger transportation. This is primarily moving crews from shore to offshore oil and gas installations, could be as much as 200 nautical miles offshore. Often there is no other viable method to transport those crews and keep those platform operationally. However, also in this category is a new growing area which is offshore wind farms. Here, helicopters are initially used in the construction phase, but their primary role is in carrying engineers to inspect and maintain the turbines as the most efficient way is to winch them down from the air. The second largest area in our portfolio is emergency medical services or EMS. This is essentially hospital transfers, picking up from car accidents, skiing accidents, et cetera. Now this is quite a large market here in the U.S. We are more focused on the European market where contracting dynamics and the assets used are much more favorable to investment. In Europe, this is a government-funded model, and the assets used are bigger and much more easy to reroll and transition either within an EMS mission or to a different mission at the end of the lease. As such, our EMS exposure is primarily focused in the U.K., France, Spain and Italy. Similarly, with search and rescue, again, here this is based on underlying government contracts. So for example, we support 60% of the U.K. search and rescue fleet, something similar in Ireland and have search and rescue assets on government contracts in both Norway and Australia. The final sector, we call utility. This is sort of a catch-all for a diverse range of missions, which includes aerial firefighting. That's an area we've seen significant growth in over the last number of years. It also includes other heavy lift operations such as power line installations, the vertical replenishment of cargo onto U.S. Navy aircraft carriers, law enforcement and multiple missions in the UN and World Food Program. So as you -- actually, some of our 225s and the ones -- ones here on the page, actually pick up the SpaceX capsules when they splash down. So this is a very diverse range of missions. This often represents a secondary home for the assets once they have completed their life in one of the other missions that I discussed earlier. So I hope that gives you a very high-level flavor of our industry and what we do at Milestone. As the global leader in the space, we are well positioned to take advantage of positive macro dynamics. We have the best team in the industry and supported by AerCap, we are consolidating that ranking and positioning ourselves well for the future. We are and will continue to be the global leader in this space. With that, I'll hand you back to Joe.

Thank you, gentlemen. That was a great overview of your respective businesses. Just a reminder, I see plenty of questions coming in, but just so you can see it behind me, give everybody the opportunity to ask some more. Have to start with you, though, Tom, $3 billion engine announcement today. What was behind that? What's the outlook for your business?

So Joe, I guess, look, I've talked about the trusted partnership we have with CFM, the long-term commitment and the favorable returns. But I'll try and put some color around why we do that type of business and why we succeed where others maybe can't. So I also talked about maintenance costs and maintenance costs and engines is hugely significant for airlines, and they typically contract that back to the manufacturers. In turn, those manufacturers contract that they will provide replacement engines, whilst one of the airlines original engines is going through heavy maintenance. So at SES, our partnership business, we aggregate that demand, and we take over those obligations for the manufacturers to supply those engines. We use our industrial infrastructure and our 30 years of experience to harness that business. So that positions us for growth where other lessors just simply cannot play. And that really is the background for this recent deal but some of the other deals we've done in the $8 billion of expansion we've done in the last 2 years. So maybe the outlook for the business, Joe, Look, I couldn't be more excited, right? I talked about 93% of our portfolio being on long-term commitments, stable and predictable income right out into the future. There's nobody in that position like we are, okay? In addition to that, Aengus and Peter talked about the number of aircraft that still have to deliver into this segment over the next 10 years. It's north of 10,000 aircraft. It could be 15,000 aircraft. The engine types we are invested in are the engine types of choice on most of those aircraft. And we are the company that can provide the spare engines for those. So I couldn't be more excited about our outlook, Joe.

That certainly answers the $3 billion investment. And obviously, there's great prospects here. And this is the balance looking to be a theme of much of today. We've heard it through all the presentations, you'll hear it again. It's just the ongoing flywheel effect of having these businesses working together. I'm sure we'll touch on that in a moment. But from your perspective, Rich, I noticed you said you're placed out to 2025. Now what's the focus on your versus the next kind of 12 to 18 months on the cargo side?

So my main focus is really delivering all the aircraft and the programs to our customers, okay? That's the top of mind for me. And the most important is getting the 777-300 certified. That's a must. And that's going to get into service with our launch customer, Kalitta, and that's my main priority this year. But in addition to that, what I see on the outlook side, and Aengus touched on it on the top of this presentation is the shortage of aircraft in supply. And that has a knock-on effect of the cargo business as well because it's lack of feedstock that's feeding into the conversion MROs. So over the next 18 months, what you'll see is that the conversion MROs will start reducing their conversion lines. And I believe that in the narrow-body sector, it's going to go down by about 30% to 50%. So with that, you're not going to have a lot of cargo aircraft being converted and being delivered. So you've got a supply issue there. So we see that, that's going to get correction in the marketplace and the lease rates is going to start to rise again.

So is that -- when you talk about that fact, it's really the -- so the shortage of supply in the past years just making sure I heard this correctly. The shortage of supply in the past years is now feeding into shortage of supply on the cargo side?

Correct.

Okay. Great. And from your perspective, Pat, what's the focus for you, next 18 months, anything on the horizon from the helicopter side that you want to highlight?

I think for our business, Joe, you've really got to look at where we've come from, right? So as I think I said in my pitch. We came out of a very deep downturn, started this decade. And really since then, the focus of the business has been to drive fleet utilization back up, get aircraft that were on the ground, back in the air -- earning revenue. And we've been pretty successful at that to date. So our utilization in the portfolio bottomed out 2019, 2020 at around 80%. And now we're in the shadow of 100% MAX utilization. . So having cleared that overcapacity that existed within the system, really the focus of the business now and has been for the last number of years is to drive release rates back up and improve the other terms and conditions around our leases. So for example, we extended an aircraft with an existing operator in 2020. The lease rate at that time was sub $120,000. It was a 3-year extension. That aircraft has come back up for release, is extended again with the same operator. The lease rates are north of $165,000. So that's the same aircraft, 3 years older, 40% rise in lease rates. And that's a pattern we're starting to see across the board. So I think the focus for the business now is to try and capitalize on that, consolidate the gains we have to date and continue to drive tenure and lease rates upwards.

So a similar theme to what Peter is really saying that this is credit story is improving. Lease rates are improving, tenure is improving?

Yes, that's correct. And I think what I would also say very similar to what Peter said is our renewal percentage has increased dramatically. So aircraft that had been coming off lease are now extending with the existing operators rather than coming back to us. That has the benefit of reducing transition costs, reducing downtime, reducing cost. And as I said, they're going back out at significantly higher lease rates.

And one thing I just had really resonated with me in your presentation was this idea of mission-critical assets, right? I think it's a theme that again, it's quite consistent across your different business lines of this -- the idea of critical infrastructure of the asset. Can you talk to me about what does it mean to be mission-critical on the helicopter side?

Yes, it's a phrase that's well used in our industry. And if you think about what we look at when we either deploy capital, new capital or when we're looking for a home for the aircraft that we have, we're very, very focused on what is the underlying mission for that aircraft, who is it ultimately operating for and how long is it operating for? So if I take the U.K. Search and Rescue for an example, those assets cannot be readily substituted quickly. The missions they fly on are not discretionary. The mission they fly on isn't really impacted by economic factors. It's critical national infrastructure for the United Kingdom. Similarly, if I look at some of the oil projects that we look at, these are multi-decade, multibillion-dollar projects. And the only way to keep them operational is to accrue them with helicopters. So we view our assets as critical to their infrastructure. So that's the theory at least. But how does it work in practice? And I think the best example of how this worked in practice was during COVID. Because during COVID, all our helicopters that were flying in January 2020, flew through January 2021, flew through January 2022. We had no material impact on receivables. We had no material deferrals. We had no material restructuring. And in fact, during that period, our fleet utilization increased. So while there was obvious distress across the entire aviation universe, these assets kept flying. And they kept flying because they had to keep flying. And that's what we mean when we talk about mission-critical.

Yes. I think that's something that probably comes under appreciated from -- certainly, when I started looking at the helicopter business and from the analysts looking at it that it's just a totally different demand driver on the helicopter side to the passenger aircraft side. There's -- obviously, COVID was probably the hardest thing that ever hit our industry on the passenger side, but obviously, not so much in the helicopter side having mission-critical assets is really the key to getting through these prices. again, similar to what Gus said earlier, but having the most in-demand fuel-efficient aircraft. It's just a theme for the day, I guess. From you -- from your perspective, Rich, we provide critical infrastructure if I have to use the term again on the cargo side, but how do we get to the situation that we're in today in terms of leading these programs?

Well, look, as I said, we spent 20 years at this, and we have a dedicated team, and we're just focused on cargo, right? No one else. And to build that team over 20 years, takes time and experience. We've got relationship with the MROs. We've got the relationship with the OEMs. So again, we're trusted to deliver, and that's kind of the key thing here. And when we look at this, going forward, who else can do this. It will take a lot of investment to do this to have the scale that we have at AerCap. And a very smart team that we have. I'm blessed with a great team. I can't say that any -- can't stress that anymore. So -- and the other thing on the critical mission when we launched the 777-300ER program. This is not a 5-year program, this is 15 to 20 years. We've invested -- seriously invested in this program as co-investor. So when we do these programs, we're in it for the long term.

I guess you're probably the poster child for this one, Tom, if I may say, in terms of critical infrastructure, given the role that we play with CFM and with GE. Can you talk to me about the operation of that, the operational element of this?

Yes. Sure, Joe. I guess, look, I talked in my presentation about our global distribution, which is fundamental to that. But I also worked for GE Aerospace before I joined AerCap Engines. And I was actually a customer of this business, and I think about what was important to me. And -- and what was important to me as a customer was availability of engines, on-time delivery, ease of contracting, 24/7 availability of people, very important in our space, 365 days a year. Aircraft engines don't break down on Monday morning. They break down on Friday evening. It's a fact, right? So that capability really drives value for their organizations. It's not a price discussion. It's a value discussion, and this is fundamental for us. So we have been able to capture demand here based on their operational requirements. And I think that really is the differentiator, Joe. And the other thing then is when we show up in an airline, we are representing the manufacturer. So there's an expectation of quality. There's an expectation that our engines are in perfect condition. There's an expectation that our configurations are exactly what the documentation says. There's an expectation that it will be there on time. So that expectation really and being able to deliver that for the 2 biggest manufacturers in the world is really our key differentiator, Joe.

And I think that's a really well put point. And just to further develop that, I just saw from the slide that we talked about kind of having 1,000 engines between SES, our JV and with AerCap engines. But realistically, you're really managing more than 4,000 engines with the passenger side. There has to be a huge amount of synergies that come from having that level of ingrained, I suppose, IP or understanding of the engine for the whole passenger business. Any examples there?

Well, look, for sure, Joe. Look, the first thing I would say is, look, we are the only fully integrated aircraft and engine lessor. There's nobody else out there that has one team. That's really important. I mentioned in my presentation about managing 3,000 engines and optimizing the maintenance. This goes directly to the bottom line to returns, to profitability. Nobody else has infrastructure to be able to do that in the way we can do it. Then I talk -- think about Pat's business. Logistically, we transport the helicopters around the world for Pat's business because that's our expertise. We moved so many engines, helicopter is just a slightly different envelope size that goes in the same transportation modes. So I think about Richard's business, the cargo and the freighter conversion program. For example, the 777s that we have in conversion, the engines from those aircraft we have out on lease, while the aircraft is in conversion. So in effect, those aircraft are still earning revenue even though they're in hangers or parked. This is a real differentiator. Peter talked about China Southern and selling more product to the same customer base. We have 57 engines through our SES franchise on lease to China Southern. This is a major advantage. And then I think Anton talked about gold where we used our spare engines to differentiate our aircraft in restructuring and then -- and therefore, defend our position and keep our aircraft on lease. So they are the big synergies. Then like you can add on all of the team, the legal, all of the functional support in the organization. So it's just a perfect fit, Joe.

Yes. I mean I think that's the bit that really surprised me. I know we certainly when the new business came in, it's just how fully integrated everything becomes. I think that's something that -- it's very hard to display on a slide. It's very hard to show or there's no kind of metric in our 20-F that shows it. But it's something that over a long period of time, just adds to the kind of the overall return profile of the business. I was a bit surprised, though, when I saw the helicopter business and the overlap between customers, Peter referenced, obviously, the China Southern deal. Is that an island or are there more that you think could come from that?

Look, I think intuitively, we think given everything I've described, our customer bases would be poles part. But more and more, we're seeing areas of overlap. I think China Southern was a good one in that. It was a huge aircraft relationship that opened us -- opened the door for us to first sell an S92 to China Southern. And then as a follow-on transaction, develop a leasing relationship ourselves. And I think, as Peter alluded to, there's a few more in the pipeline where one part of the organization has opened up the door for another part of the organization to do business. 30 explicit ones, 30 obvious ones. I think what's less obvious is maybe some of the overlaps that there are even amongst the businesses on the stage here. So Tom's business leases and finances the entire spare engine for the CT7 engine, which is the engine type on our core products, the S92 and the AW189. And also, I mean, I touched on my presentation what the OEM landscape looked like for rotary in terms of airframe manufacturers. But what I didn't mention was it's common engine OEMs across the platforms. So the relationships that Tom and his team and Aengus and the entire AerCap team have with GE, Safran and Pratt & Whitney are instrumental in us being able to provide solutions to our customers that our competitors just can't.

So I haven't really appreciated that point, either that the idea of the engine OEMs. So obviously, what I saw with the airframe OEMs are very different, but the engine OEMs are common, so would you say with the 3 main manufacturers in the helicopter side?

Yes. So the main engine OEMs for all our products are GE, Safran and Pratt & Whitney, familiar names.

On the cargo side, early, there's a linkage between the customers and passenger aircraft and running cargo. Can you talk through a few key wins there, Rich, on your side?

Yes. So Peter mentioned the Emirates relationship and they're on the 777 program. And it goes a lot deeper than that because Emirates is the largest operator of the 777. So they have a huge experience on that aircraft type. And over the past 3 or 4 years, we've been working with the pilots, the engineers with IAI our co-investor to really understand that aircraft. And that's really helped us on simulator training and the pilots giving feedback to the IAI team on how to operate this aircraft going forward. And that helps translate to the Civil Aviation Authority of Israel and the FAA, so that we have a very -- as I would say, projected and intellectual conversation with the authorities about the actual procedures of the aircraft, et cetera. And then the actual program itself we are actually partnered with Etihad, and they have Etihad engineering. So that actually is a customer of us on the A320, we lease A320s to them. But we're also developing 2 conversion lines in Abu Dhabi with the 777 program. So there's synergies there. There's another thing that not a lot of people know about the e-commerce market and that's -- a lot of the e-commerce platforms do not have an AOC, which is an aircraft operating certificate. So I'll give you an example, Amazon, they use Sun Country to operate some of our 737-800s and they also use Hawaiian for A330s. So that's a classic synergy where...

Are we leasing to Amazon in that situation or to Sun country?

Yes. So we have a direct lease with Amazon, and they actually sublease that aircraft under what's called a CMI, which is a crew maintenance insurance contract. So that's with the airline. So Amazon have that benefit of all that infrastructure is on the actual airline itself rather than Amazon.

So we get the benefit of having a strong credit like Amazon, and they're outsourcing the operation of it on the cargo side the day-to-day operations of another customer of ours. Okay. I realize we're coming relatively close to time, and we've got loads of questions coming through here. So we'll do a bit of a quick fire around here. I'll just start with an easy one with you, Tom, what the difference between SES and AerCap engines? How would you differentiate them?

Right. So it's about focus. SES is totally focused on CFMI product lines, and we are at AerCap engines totally focused on wide-body engine support for GE Aerospace.

One here for you on the helicopter side. Are you closely following the EVTOL markets development and what risk might that have for your business?

Yes. As you can imagine, that's not the first time I've been on the panel and ask that question. Look, they take up vertically and they have our orders, but that's really where they're coming out of the ends between all the EV titled platforms that have currently been developed and the aircraft that we invest in and that we own. I talked a lot about mission-critical earlier. If you're 150 miles out over the North Sea on a search and rescue mission, you don't want to be worried about the battery. If you're on the side of a mountain picking up a skier, there's no were to plug in. So I think given the pace of development. And more importantly, the pace of certification of all the platforms that they're out there, I think it's really the end of the next decade, I think, before it even becomes a consideration in terms of competition for our products. .

Is it not for today or tomorrow, it sounds right. Rich, and you said, when do you expect the first 777s to deliver?

Well, as I said, mid-2024. And then we'll start to deliver all those aircraft in between '24, '25 and '26.

Tom, do you worry at all about the long-term reliability of new technology engines given all the issues we read about today?

I guess I'd split that question, Joe. I think we have to be worried about the near-term impact because it impacts the revenue of our customers and their ability to fly. But the long-term impact, I think, is we have a lot of experience in previous generations of engines where actually the new technology it is now that's not as durable, but actually it is doing better than the predecessor engines that were at that stage of development, if you like. It's just the predecessor engines had 4 or 5 generations of reinventing themselves in maturity. So in the long term, these engines, Pratt & Whitney, especially will get on top of their issues and these engines will mature. But in the near term, our investment in this space is supporting our customers to get through some of these challenges.

So what you're saying is the entry into service of the maturation issues were saying, this is kind of -- this is bread and butter for a new engine program. Yes, it's disruptive for customers, but long term good health.

Absolutely, Joe.