Chris Stathoulopoulos

Chris Stathoulopoulos from Susquehanna International Group inquired about AerCap's outlook on extension rates for 2026, considering geopolitical and economic uncertainties, and sought more details on the types of aircraft and transactions involved in asset sales, and how this might evolve into 2026.

Answer

CEO Aengus Kelly expects extension rates to remain strong into 2026, citing airlines' long-term fleet planning and persistent production shortfalls and engine issues. He explained that asset sales consistently focus on improving portfolio quality by divesting older mid-life assets, with a few newer technology assets sold to reduce Chinese exposure, a strategy expected to continue.

Chris Stathoulopoulos asked for AerCap's outlook on aircraft extension rates for 2026, considering geopolitical and economic uncertainties. He also sought more color on the types of transactions and aircraft involved in recent gains on sales, and how this might evolve into 2026.

Answer

CEO Aengus Kelly expects extension rates to remain consistent in 2026, as airlines' long-term fleet plans are not significantly altered by short-term issues, and production/time-on-wing factors persist. He noted a consistent approach to asset sales, primarily older mid-life aircraft, sold to improve portfolio quality. He mentioned a few newer tech assets sold to reduce Chinese exposure and attributed accelerated gains to the GECAS platform's capabilities in engine cost and shop visit management.

Chris Stathoulopoulos, Senior Equity Research Analyst at Susquehanna International Group, sought deeper insights into demand trends, specifically the interplay between leisure and corporate segments in September, the Q4 outlook across U.S. domestic, international, inbound, and cross-border markets, the impact of the government shutdown, and Avis Budget Group's preparations for future events like the World Cup and America's 250. He also asked about the long-term (1, 3, 5 years) plan for customer experience investments, their translation to margin, earnings, free cash flow, and ROIC, and the guardrails for ensuring EBITDA sustainability.

Answer

CEO Brian Choi described a mixed demand environment, with healthy leisure but unevenness across segments and geographies. He noted challenges in the government and government-adjacent commercial segments. He emphasized discipline, agility, and controlling service consistency and dependability, confirming planning for the World Cup and America's 250 as potential net positives for 2026. Regarding the long-term plan, he outlined a deliberate shift to treating customer experience as an operating system, focusing on predictability, speed, and empowerment in the customer journey, and re-engineering customer care with AI. He stated the goal is to maintain a baseline EBITDA over $1 billion as a floor while continuously investing in customer experience.

Chris Stathoulopoulos asked for insights into how Southwest frames its mid-to-long-term CASM-X (Cost per Available Seat Mile excluding fuel) algorithm, similar to what United Airlines provided, especially concerning the moving pieces around low single-digit capacity growth and product investments for 2026.

Answer

CFO Tom Doxey stated that the planning process for 2026 is still underway, with more details to be provided on the next earnings call. He highlighted Southwest's consistent strong cost performance, including a significant beat in Q3, which was broad-based across the business. He reiterated that cost savings initiatives are on track for this year, next year, and towards the $1 billion target in 2027, encompassing various areas from discretionary spending to supply chain optimization and technology.

Chris Stathoulopoulos from Susquehanna International Group asked for a strategic perspective on Carnival's ability to protect pricing power and brand equity in the Caribbean, given anticipated competitor growth, new hardware, and a potential increase in capacity. He asked how Carnival plans to maintain its share, contextualizing this with the mix of premium cabins (balconies/suites) and the impact of its two private destinations.

Answer

CEO Josh Weinstein contextualized the Caribbean market as competing against land-based alternatives, where cruise is still a tiny segment, offering ample growth opportunity. He noted Carnival's own new XL sisters (2027, 2028) and the "Ace Class" for Carnival Cruise Line, which will carry more guests than existing ships, helping protect its position. He emphasized Carnival's long-term commitment to the Caribbean, differentiating it from competitors who may view it as more transient, and highlighted the role of destination strategy (Celebration Key, Half Moon Cay) in driving demand.

Chris Stathoulopoulos asked for a strategic view on Carnival's ability to protect pricing power and brand equity in the Caribbean, considering competitor capacity additions and new ship classes. He requested this be contextualized with the mix of premium cabins (balconies, suites) and how Carnival plans to push yields and maintain market share as the Caribbean market evolves.

Answer

CEO Josh Weinstein acknowledged the long-term growth of the Caribbean market, noting that Carnival's primary competition is land-based alternatives, where the cruise industry remains a small player. He highlighted Carnival's upcoming XL sisters (2027, 2028) and the new Ace Class ships, which will be the world's largest, to reinforce its position. Mr. Weinstein emphasized Carnival's long-term commitment to the Caribbean, contrasting it with competitors who may view it as more transient, and underscored the importance of investing in destination strategy like Celebration Key and Half Moon Cay.

Asked for details on the Q3 capacity composition (departures vs. ASMs), whether they expect industry capacity in Florida and Latin America to normalize, and if Spirit can maintain a CASM below 8 cents in 2025 given the various cost and operational pressures.

Answer

Executives explained that Q3 capacity will be up high-single digits due to aircraft deliveries offsetting AOGs. They expect supply and demand in Latin America to normalize over time. Regarding 2025 CASM, they acknowledged many moving parts but stated they are targeting a number around the 8-cent mark.