FTAI Aviation Ltd. (FTAI) Earnings Call Transcript & Summary

All right. Thanks for joining, everybody. This is the first company that I've sat in with today. My name is Jamie Baker. I cover the airlines and the aircraft lessors, but I'm actually thrilled to be shifting gears to engine leasing for a change. We're very pleased to present FTAI Aviation. We've got Joe Adams, CEO here, and let's kick it off. Thank you for being here.

Thanks very much, Jamie. Great to be here again this year, and I appreciate the opportunity to update everyone on the story. We are very much in love with engines, so we like that description. And I'll start with just a run -- brief run-through of the business, and I've got the slide deck open in front of me. On Page 3 is basically FTAI Aviation is a company that owns and maintains commercial jet engines, and we focus heavily on the CFM56 engine, which is the largest engine type by count in the world. We think it's a great engine. It's terrific, a proven technology and a great moneymaker for all the airlines. And so we're very -- I've been very focused on that for really the last 7 years. The -- what we offer to our airline and maintenance and asset owner customers is really two things. One is flexible power deals where we can provide engine power in the aftermarket for anybody that operates and uses a CFM56 engine on a very flexible basis such that they can return it whenever they need it. And if they need a new engine because one has to go in the shop, we give them a replacement. And then secondly, we save people money by saving them time in the shop and also saving them real cost savings on maintenance expenditures. So very different business, but our -- basically our offering is pretty simple. We go in and tell people we can save you time and money and what's wrong with -- which part of that don't you like? So that's really what we do. We have two divisions -- two segments. One is the leasing and power program group, which is self-explanatory. We release engines and airplanes and we often invest in airplanes so that in the future, we can own the engines. And we also provide perpetual power deals through that group as well. And then aerospace products, which is really several different products. It is PMA,, Parts Manufacturing Authority, where we've manufactured through a joint venture parts. We provide maintenance activities, module exchanges. We opened a storefront called The Module Factory, and then we part out engines, which creates what we call USM, or used Serviceable material. So today, we have a market cap of about $2.5 billion equity value. If you look at this page, what we ran through in the supplement is we are estimating this year between $550 million and $600 million of EBITDA, which is comprised of about $100-plus million from our aerospace products business and the balance from the leasing activities and walk down through the cash flow, which shows that we generate after cash flow from operations of approximately $300 million. So it's a nice cash-generating business. We have an increasing number of contracts that run long and it's a fairly predictable cash-generating business. If you look at the portfolio, as I mentioned, we're heavily invested in the CFM56 engines. And when you look across both the aircraft and the engine portfolio, which were carried separately in the filings, we have over 330 CFM56 engines, which makes us one of the largest owners of CFM56 engines in the world and we will continue to increase that number. We have a pretty active pipeline of new deals at the moment and we expect to close quite a few additional CFM56 engines. And that's where we have our competitive advantage primarily. The other engines are a good business, and they've been great generating a yield and there's strong demand for them, but we can manage the maintenance activities for the CFM56 at a significantly lower cost than other people. This is an example of that what we do offer airlines is we can go to them and say, "We will take you out of the shop visit business." So you don't have to manage engine shop visits, which can be -- take a lot of time. You have to go find a replacement engine. Sometimes you have cost overruns, which is almost always the case. So that immediately has a lot of benefits. And you don't have to get a replacement engine that saves you from having to lease a spare. And you don't have to worry about how long that engine is going to be tied up in shop. And increasingly, with supply chain problems in the industry, shop visits are going to take a lot longer than they did a year ago. And so that number is going to -- the cost savings on this is just going to -- is going to increase. And as I mentioned earlier, it's a flexible return. So we don't get into fights at the end of leases with our airline customers whenever they're -- the engine is ready. Because they've been paying maintenance reserves all the way along, we don't have to have a return comp discussion or fight at the end. So it's very attractive for airlines, in particular, if airlines over the next 3, 5, 7 years are looking at phasing out their existing 737NG and CO fleets. Aerospace products, I mentioned, this is a low-cost solution. We provide modules, [ users ] material and PMAs. So we're vertically integrated, all the way back to the piece part level. And there's a huge opportunity for savings and that this engine is neatly divisible into 3 different modules. Think of it like LEGOs because each of those 3 parts were made in a different location that you can actually snap them together very easily, and they're very interchangeable. So there's tremendous efficiencies in being able to swap modules if only one section of the engine needs maintenance or if you want to optimize the number of hours and cycles by putting the same number of hours in the cycles for each of the three modules together. A little bit on the market itself. As I mentioned, this is the largest engine market by count in the world. It's 3x larger than the next biggest market, which is the V2500 market. There's over 20,000 -- 22,000 engines that were manufactured, 21,000 still in service. And if you look at the pie chart on the right, the -- originally, when these engines are sold, new or delivered new, they typically have a power-by-the-hour contract from the original equipment manufacturer, which would last anywhere from 8 to 12 years. And then over time, those run out. And so our opportunity to save people money is when they're served in the aftermarket, which is the light blue chart. It's about 75% of those engines are served in the aftermarket. And that number is about 16,000 will remain constant really through 2030. So for the next 7 or 8 years, this is still going to be the backbone of the world's fleet, and it's also going to be the most -- the highest expenditure for maintenance activities of any engine by far. And then if you look at the shop visit projection itself, it was -- this chart was pushed to the right by COVID. So when you had COVID and airlines weren't flying as much, a lot of these engines did not go to the shop because you didn't need to spend money on a shop visit if you had spare capacity. So we called it burning off the green time. And now you have -- most of that green time has been used up. And so now we're starting to see a higher level of shop visits, projected to grow to 3,000 next year and over 4,000 at the peak or around 4,000 at the peak over -- between 2026 and 2030. And it's broken out between heavy shop visits, which is where you totally disassemble the engine, replace and inspect every part and hospital shops. And hospital shops are growing. Particularly, as the fleets age, sometimes you just need to address one part of the engine, replace a bearing or replace fan blades and you can do that very quickly. And we actually invested in a business called QuickTurn to do just that, to manage the hospital shop visit. This is the cost savings that I was talking about. If you put a full portfolio of our products together, list price on a shop visit today, full restoration is $6.8 million, and we can manage that with our portfolio of products for $3.6 million or approximately half of the cost of the list price of the OEM full restoration. So significant savings. A lot of these products are proprietary to us. So no one else can replicate this. And over time, if the parts prices keep going up at, say, 7%, which is conservative given last year it was double digit, we have locked in our price on our parts manufacturing so that, that number will get even bigger and grow to almost a $6 million discount off the OEM list by 2030. So this is where we can share those savings and deliver cost savings to airlines and have a business that generates very high returns, and we sell a service as opposed to just an asset. Our business is all around the world. We deal with the whole ecosystem of CFM56 users, be it airlines, maintenance shops, asset owners. And as I was saying earlier, we're growing our relationships with the lessor community, which is important. It's about 60% of the ownership of the fleet is in the lessor community, and we can provide products, particularly around return compensation, maintenance events that had to be done and module swaps, and we've been growing the business on that side. We already do a fair amount of business with maintenance shops like Lufthansa and others. And then, of course, airlines are the core of the fleet. So we've got a good customer base and it's one that's going to keep growing. So that's the overview.

All right. thank you very much.

Thank you.

All right. We'll certainly open it up to Q&A, but let me start off here. Can you go back to the illustrative earnings and cash flow statement, which was one of your first ones?

Yes.

So first off, illustrative, does that mean that's not a guide? Or is that just a nuance?

It's within -- we have -- no, that's a nuance. We have told the market that $550 million to $600 million of EBITDA is what we expect for this year, 2023. So this is the midpoint of that range.

So where are the pressure points on the income statement? I would think that at the beginning of any year, you have a very good handle on contracted visits and what's going to be coming in. I suppose there's always a [indiscernible] event or something breaks unexpectedly. Where are the pressures -- where are the greater variables on the income statement as you build up to that -- the 500 -- mid $500 million range on EBITDA? If you miss, where is it going to happen in other words?

Yes. Well, I think there's -- if you go back to where the two segments, where we have a fairly sort of established leasing business, as you mentioned, which is -- a lot of that is contracted. You do get variation, though, and we've seen that in COVID with the number of hours that operators fly. So we have -- we collect maintenance reserves, so hours and cycles is a variable in terms of what we get paid on. So during 2019, pre-COVID, we had airlines that would fly 350, 400 hours a month. And then during COVID, those -- some of those same airlines were doing 200 to 250 a month. So that's probably the biggest variable on the leasing side and the power side. And as I mentioned, we've been locking in more and more programs where we serve, for the duration, these engine lease agreements. On the aerospace products business, we've really been ramping that business. We did $70 million of EBITDA last year. we're projecting north of $100 million this year. We sold -- the biggest portion of that is modules. So we sold 100 modules last year to 25 distinct customers. And it was a mix of airlines, asset owners and maintenance shops. We expect to be able to grow that -- and -- so that represents about four modules per customer last year. So we think we can increase the number of modules that each customer uses because a lot of airlines and asset owners were just trying out the product really for the first time. We have some very sizable airlines that did two modules, for instance, and they have fleets of hundreds of airplanes. So we expect that number -- per customer number to go up. And we make today about $0.5 million per module, and we expect that to be relatively the same going forward. The second thing is growing the customer base. So 25 in this universe of -- this size market is not a significant number of customers. So we think that over time, we can double that as well. And so then the last part of it is the profit per module. Once we have a complete suite of PMA, we expect the profitability of the module business to double also. So if you start with 100 modules and you double all those numbers, that's a multiple of 8, so you can actually increase your EBITDA just from the module activity over the next 3 years to roughly $400 million. And then the balance is going to be used serviceable material. We expect to tear down about 40 engines this year, we tore down 20 last year. Very strong market for used material. And then ultimately, the JV with Chromalloy, we believe, will also contribute $50 million of EBITDA.

Okay. And on the first point, utilization, one would think that given the chronic OEM delays right now, airlines around the world are flying their fleets harder, not less hard. And then I would think there would be some level of potential upside to that assumption in your model.

Yes. I think in particular, in the second and third quarters, which is typically the busiest quarter, so I think that we expect there to be a very high level of asset utilization across the industry in the second and third quarter this year from all indications, in particular, as you mentioned, delays in new aircraft deliveries, not having engines on the wing, those types of things.

And in terms of growing beyond the 25 that you spoke to and pardon my ignorance, you and everybody, who do you lose business to? I mean who are your -- I mean are you bidding against Delta?

We actually -- well, there's two answers to that. The Module Factory is a brand-new product. So if you were Delta, American and United and you have hundreds of airplanes, you could manage your own module swaps internally and they did so. But if you were X, Y, Z midsized airline with 100 airplanes, you couldn't find -- you couldn't go anywhere and buy a module. So we created a new storefront, and we branded it module factory. So it's not something that we're taking away from anybody else. We've created this opportunity, and it creates a lot of efficiency. As I mentioned, if you can reduce -- instead of having an engine go and sit in a shop for 4 months while you're waiting on just to do work on the low-pressure turbine. If you do the swap, we can have it out in 10 days. And so that opportunity didn't exist for most airlines prior to our introducing this product.

Okay. And second to that, what drives the growth -- what drives these shop growth to 4,000 events by 2028? Is that just predicated on your estimate of what's coming off wing? Do you have to procure a certain amount of incrementally of engines? Obviously, the module is -- well, actually, that's something different. What drives you to 4,000 events?

So these are industry numbers that consultants have done for us and updated. This is just the maturation of the existing fleet. There's nothing more than that. And if you listen to both Safran and GE, they'll say 60% of these engines still haven't had their first shop visit. So you can pretty clearly -- if you don't have another COVID where people stop flying, then you can -- it's pretty accurate as to how many of these engines are going to need to go into the shop.

And you didn't provide a breakdown, the percentage of customers that choose the traditional program versus perpetual. What's the estimated breakdown there? I've got to imagine perpetual is probably more profitable for you. But I would also think that it's growing faster and I'm just trying to think as an airline here, but are those assumptions reasonable?

Yes. I mean we haven't made a specific assumption about how many customers we'll have under perpetual power agreements. Today, it's less than 10%. It's a fairly new product, but we did -- two deals we did last year on a sale leaseback basis, ITA and Avianca. You could assume that those two actually did it because we had a new deal, new money, the opportunity to set it up the way we want it as opposed to if you buy an aircraft that's on lease already, it probably doesn't have that built in. You'd have to change it. So you have to wait for the next renewal usually. But we're doing it on a lot of new transactions that we initiate. So I expect that, that number will keep growing as we go forward. And we've seen very little resistance to it. Initially, you'll have somebody in the maintenance department or somebody in the company say, "Hey, wait a minute, I do that, what are you doing? I want to manage the shop visits." And then ultimately, CFO and the CEO says, "No, you don't." It's nothing but -- nobody ever comes back from a shop visit and say, "Oh, boy, that was a great experience."

Mark, you had a question on that topic or something else?

Modules, just for [indiscernible] mentioned that when you have more PMA parts, that will lower your cost on the modules. So can you just talk about what is actually in the modules versus what you're doing on the PMA side? Because then I wanted you to also explain the cost difference from buying original equipment versus your PMA prices? Because I think it's still pretty significant, right?

Yes. So the three modules, and we actually have a nice website. We bought this maintenance facility in Miami, it's called QuickTurn. If you go to quickturnengine.com, you can see the modules broken out and what the activities are that we do at that facility. So it's actually a good visual. But essentially, you have a fan, a core and a low-pressure turbine. The fan has no PMA in it. The most of the PMA and -- the core is where the jet fuel ignites and that's the hot section of the engine. That's where the temperatures reach 1,500 degrees centigrade. So that's the high tech portion of the engine. And we have several PMA parts under development. And then the low-pressure turbine is the third section -- third module, and we have one PMA part that's been approved, and we've been installing it in our engines for the last year. So that's actually in operation. We have -- because we funded the development costs of those parts, we have the ability to buy those parts at cost. And cost is a significant -- I mean I think if you if you know the engine part business, you know the margins are extraordinary. So it's a very, very huge delta. So that would be where a good chunk of the savings would come from. And it will be in the low-pressure turbine and the core.

But on the parts that you're -- the PMA parts, if you were to buy those a la carte, just refresh our memory in terms of what you have in the hopper in terms of what you're selling them for versus what the original equipment manufacturers are selling them for, the same parts?

So typically, Chromalloy would be offering those parts at roughly 2/3 of OEMs, so 65% or 70% of OEM list price. So that's providing savings to airline customers, and they have 12 hot section parts that are already -- have been approved or in manufacturing. They've flown 2 billion hours, a great track record. And as you've heard, I've talked about the CF680 engine a lot because that's been the case study that I think is the best road map for what is doable. But it's about -- the order of magnitude is, if our parts would save $2 million a shop visit, then the airline could get $1 million just by buying direct.

So -- and I just want to ask you about -- I know in the past, you've kind of referred to, I think, one of your deals, where you bought some 319s -- older 319s almost run out, but you're buying them for the engines. And so I think you've mentioned one of your slides, I think 90% of the value is in engines. And on that deal, it might have been 90% or maybe 100% was in the engines. And I'm sort of thinking about airlines that have old fleet types like that. On the one hand, a lot of those fleets may have been grounded from COVID and might be available. But on the other hand, because of the delays of the new kit coming in, what we heard from a lot of the lessors and the airlines, of course, is they got to keep flying this old equipment because they can't get their hands on the new planes. So when you think about your ability to do deals like that, to buy these old airplanes, is it a good market? Do you think it's going to get a lot better as Boeing and Airbus get their act together and start actually delivering airplanes so people can free up the older airplanes? Is that the way to think about it?

Well, any time you have a delay, then the airlines want to keep the existing assets flying longer, and that's always good for us. Basically, you're just pushing out the ultimate retirement further to the right. And so the A319 is a good example where we were buying them the last 1 to 2 years, assuming that they would have been scrapped. And we're having airlines now coming back saying, "No, no, I want to extend." And that is -- that's phenomenal returns when that happens. So we love that. And that also means that there's more engine hours being flown. And so that's been the history of new aircraft deliveries anyway. If you go back, as you know, the 767 and transitioning to the 787 didn't happen quite the way people forecasted. And there still is no replacement with the 757 really, but A321. So those -- people tend to underestimate the remaining useful life of assets, which is very good for us.

But is that how we should tie your story back to what's happening with new engines now because, to Mark's point, this was a theme that all of the aircraft lessors touched on yesterday. Steve Hazy last week at ISTAT quipped that the economics -- the superior fuel burn economics are being fully offset by the time that engines are spinning off wing. And in fairness, the JT9D didn't exactly hit the ground running. But the consensus seems to be that these engines may very well not grow out of all this teething pain. So -- and to be clear, this is not an engine type that you're doing business with, but how do we tie that thematically back to your story?

It's very good for us because the whole pitch with the new technology is fuel savings. You deliver fuel savings but then you have some amount of give up on maintenance. And the unknown right now is the maintenance give up. So people don't know what the savings will ultimately shake out to be. Now usually they get -- fixes are coming and they'll have new parts and things that will address a lot of those issues presumably are coming over the next few years. But in the meantime, the reliability, the proven performance of the CFM56 engine is phenomenal. And so people are not going to stop flying those until the sort of -- they're going to keep them a lot longer is the point. And so that's our story is we are the CFM56 engine. The longer that engine is in service, the better for us.

Is this the best possible operating environment that you can...

It's pretty good. I mean we went from -- we went through COVID and then Russia invading Ukraine. So it's now flipped, so pretty much everything is working in our favor. Inflation is actually beneficial because parts -- engines are basically parts and parts prices going up. Last year, the OEMs raised prices between 10% and 13%. So that's positive. It means everything we own and all of our cost savings get better. Delays in new aircraft deliveries means the older airplanes are more in demand. Delays or higher maintenance expense on the new technology makes the old technology better. So yes, everything is -- and obviously, the travel recovery is big. So...

And pardon my ignorance, what was your Russian exposure? I mean I assume you had...

Yes, we had $125 million of assets we wrote-off.

Okay. I think we might have asked you this question, but the more -- last year when you presented, but the more I hear, the more I'm having difficulty reconciling why you're independent. I mean isn't this just sort of a glaring takeout candidate? I mean I don't cover the company, I'm not talking my own, but I just I don't know, that's kind of how it jumps off the page at me.

It's possible. I mean it would fit. I could see it fitting in various places, yes.

Right. And I should have checked this before I ran it out. Where were you trading now on a price-to-book basis?

Well, it's -- price-to-book is no longer a useful metric. We spun out infrastructure business. So most of the book value went with the infrastructure company. So we are looking at total enterprise value to EBITDA as...

I was just thinking about comping you again because clearly, the returns -- well, maybe not clearly, but they appear to be superior to what I'm accustomed to in traditional plane -- aircraft leasing. So that's why I was trying to draw a valuation because it might not...

We also have a service component. As I said, we're providing a service to airlines that provides real cost savings. So I think it's a hybrid model. Leasing element of it is important to give people the flexibility and to structure transactions more efficiently. But really, it's about providing savings and service.

Joe, can you talk about your degree of vertical integration? Is there more to go? Do you control as much of your cost structure? You mentioned the PMA ramp and how you'll be incorporating that. But I'm thinking about this QuickTurn operation and just other MRO capacity. Is there -- can you become more integrated to increase your margins further?

Yes. And so we have several ideas on that front. I mean we've -- obviously, we've entered into a joint venture to manufacture parts. We have a maintenance deal for full restorations with Lockheed Martin. It's a great partnership, and they invest a lot in the facility. And so we're very happy with that. We have the part-out partnership with AAR, which is exclusive so that they have the largest aftermarket parts distribution business in the world. And we supply all of the used serviceable material they sell through their systems. So that's a great relationship. We added QuickTurn, which allows us to -- really to add to our Module Factory business. The real leverage in that is being able to manage the customer experience and put us in direct contact with delivering that service to the airline customer. And there are -- there's one big airline that's a big customer in Miami that is noteworthy. So that's very good. And the next area that we're focused on is repairs. So whenever an engine is torn down, a lot of those parts have to go through a repair process before they can be sold and put in another engine. And last year, we spent roughly $50 million on repairs. So we're looking at -- and that number, we expect, could double over the next couple of years. So we're looking at being able to do either partner with somebody that has a repair portfolio, develop repairs of our own, and -- or use our buying power. So that's kind of the next project. But yes, I can envision continuing -- for us to continue to expand our product offerings. And it's also -- an added advantage of the QuickTurn acquisition is that we are in those dialogues with the customers now on a direct basis because we're providing the maintenance activity. So being able to sit down with airline customers, manage their repairs and then have a regular, whether it be biweekly or monthly meeting with the airlines is like what's going on? What are you doing? What do you need? What's happening? That's very, very valuable information.

Is there any reason to envision that you'd ever expand beyond the CFM56?

Well, the -- I mean we will be in the new technology eventually. It's -- there's not enough -- first of all, it's not the right time to get into that. The events that are happening right now are not the ones you want to be involved in. So -- but yes, I think that we would, obviously, look at the next-generation technology when that gets to the point where it's -- you start to see a meaningful level of aftermarket activity.

And just overall, the barriers to entry in this business, setting apart the modules, which is your own new thing?

Yes. We try to create a new barrier every year. So -- I mean when we go back to the beginning, we started with people because there's not a lot of power plant experts in the industry. So we've got a fantastic team of people. We've grown that. Then we went into the parts manufacturing, which there's only one company in the world that manufactures hot section PMA for -- that's not aligned with an OEM, and that's our partner on an exclusive basis. So that's not something anybody can replicate. AAR, as I mentioned, is exclusive. QuickTurn, we own the facility now with a test cell. The key is those last few words, "with a test cell," because once you do maintenance on an engine, most airlines in most cases, you run it through a test cell to calibrate it and understand, you get all the readouts on the information to make sure that it works before you put it on the wing.

I'm a huge advocate of that for the record.

As a passenger, you'd be -- you're a fan of. So having a test cell enables you, again, to manage that customer experience, put you and customer at the front of the line, not have to wait. So that's another high barrier to entry. There are only 4 independent test cells for that engine in North America. One is Lockheed Martin, which is also our partner. And then one is Lufthansa, who we actually partnered with on the WestJet deal. So we have a great working relationship with Lufthansa. So it would -- if you wanted to start today to build a test cell in North America, it would probably take you 3 years to do that. So that's another barrier to entry. And then we'll -- Lockheed has developed some proprietary repairs, which they do in the shop, and we will be looking at developing repairs as well because [ the best day of your world ] is to show an airline is you go in there and say, "Here are the things we've done that save you money," which you as an independent airline with two people in your maintenance department, you don't -- there's no way you can do that. You can't manage that as efficiently as we can.

Any questions from the audience?

Just two quick ones. Just on the perpetual power programs, can you just give us a little bit more detail on? Slide 6 gives us good sense as to why it's beneficial to your customers, but just maybe a little bit more detail on the structure of deals from your end? And then also, just as you expand into more service oriented, how should we be thinking about working capital and how that changes?

Great question. On the perpetual power deal, a good example of this is the deal we did with Avianca. So we had -- we did a sale leaseback on -- over a year ago, and we, at that time, structured a new lease which provides exactly the structure that when an engine is due for a shop visit, they don't handle it, they don't manage it. They turn it back to us, and we give them a replacement engine. We actually have positioned a spare now at their facility. So if they need an engine, there's one on site and immediately available. So that is the pitch. So we manage the shop visit. Once we take that engine back, we could either repair it, take a module, put it in our Module Factory or part it out. So we have all the optionality on the engine we get back. We then sold some of these leases with Avianca to two different leasing companies where we actually sold the lease, but we retained the engine management contract. So we collect all the maintenance reserves, we perform all the engine services, but we don't own the airplane anymore, the leasing companies do, which is a great structure because we were able to sell those at a gain and retain servicing. So on that, the economics are approximately that we'll make about $1 million per aircraft net per year. So we've been able to generate a least, sell it at a gain and retain the best part of that contract. So that's a current immediate real example that we would love to replicate.

You are not pricing on the lease that -- the combined contract or you did this in a separate contract?

Yes, yes, which is the first -- we've done two deals now. So we have real counterparties that they like it. I mean not every leasing company would do this. A lot of people would want to manage their own engine maintenance programs, but there are a lot of leasing companies out there that are like, "Fine with me. I don't want to manage that." There's been a lot of negative experiences on engine shop visits, and it's only going to get worse as you have supply chain issues, you have reports of shortages of single parts that you can't get that the engine might be sitting there or you take it into a big MRO shop and they look around and they say, "Oh, there's a lot here that needs to be fixed." So it ends up escalating. The second question was...

Anything about change in working capital?

Working capital, yes. So today, in our aerospace products, we have about $150 million of working capital under this scenario which I went through, where we're generating $500 million from that business. We estimate that it will only require about $100 million more. So we think we could do that with about $250 million of working capital. So very capital efficient.

Another one from Mark.

I'll sneak in one more, Joe. In Miami, we were talking about -- you gave a really great matrix. And I wonder if you can just review it real quick because I think I lost my notes, which was on 7Bs and 5Bs in terms of where we are for values and lease rates versus the high, the low and current. I think it's good for me at least to level set and maybe for people in the room.

I have to remember what I said then.

It was sunny and it was warm.

So 7Bs, I think what I think I remember saying is they were roughly sort of 50,000, 55,000 pre-COVID, this is monthly rent, probably a low of 40,000 to 45,000 and now it's approaching 60,000. In terms of the 5B, it was probably 45,000 to 50,000 pre-COVID. It went to power by the hour deals. In some cases, 35,000 maybe would be a ballpark. And now it's back in that probably the 40,000 range, but moving up quickly. I expect by the summer that, that actually will be at or above COVID levels. And the reason was that Europe was slower to recover from COVID and flying levels and Omicron was a bigger issue. So that -- but that's coming back fast this year.

And then how about on values, just real quick, because that was lease rates?

That lease rates. So pre-COVID, 7B was probably $5 million, went to $3.5 million, it's back to $5.5 million, pushing $6 million. The 5B pre-COVID was probably $4.5 million. We bought some at $2.5 million, $3 million at the bottom. And it's probably $4 million, $4.5 million pushing that now.

Joe, that's been great. Thank you very much.

Thank you.

Thanks for attending, everybody.